U.S. equity futures and stocks tumbled Thursday while bonds jumped and oil soared as Russian President Vladimir Putin’s decision to order a military attack on Ukraine cast a pall over global markets.

S&P 500 and Nasdaq 100 contracts slid more than 2%, signaling the latter, tech-heavy gauge may end up in a bear market. European futures shed almost 4% and an Asia-Pacific equity gauge fell to the lowest since 2020. The Moscow Exchange suspended trading across all markets.

Russian forces assaulted targets across Ukraine after Putin ordered an operation aimed at demilitarizing the country, prompting Ukraine’s foreign minister to warn of a “full-scale invasion.” Ukraine imposed martial law.

Putin said Russia doesn’t plan to “occupy” its neighbor, but that Russia must “defend itself from those who took Ukraine hostage” — the U.S. and its allies who had crossed Russia’s “red line” with expansion of the NATO alliance.

Crude surged on possible risks to Russian energy exports, with Brent scaling $100 a barrel for the first time since 2014. The flight to safety saw the U.S. 10-year Treasury yield fall below 1.90%. Gold hit the highest since early 2021. 

The dollar and yen jumped, while the euro and commodity-linked currencies retreated. The ruble hit a record low versus the greenback in interbank trade.

Western powers condemned the military incursion and vowed to step up penalties on Russia — President Joe Biden said the U.S. and its allies will impose “severe sanctions.”

The cost of everything from oil to grains to metals has jumped on worries that raw-material flows will be disrupted by the unfolding crisis. Ukraine is a major grain exporter and sanctions could isolate Russia, a commodity powerhouse. 

That backdrop heralds fresh challenges for a global recovery that was already struggling with elevated price pressures and tightening monetary policy.

“Basically, there’s no scenario priced into the markets because it’s impossible to discount fully,” said Kyle Rodda, analyst at IG Markets Ltd. “This is always the worst set of circumstances. Bad news is one thing. Bad news with practically unknown outcomes is another.” 

Markets pared back bets rate increases by the Fed in 2022, with about six 25-basis-point hikes expected. Investors remain worried that Fed tightening could choke the expansion in the world’s largest economy.

The escalation by Russia “will spur further risk-off moves into safe-haven assets, considering that the situation will remain volatile with retaliation measures coming from Western powers,” said Jun Rong Yeap, a strategist at IG Asia Pte, adding “upside risks to inflation just got elevated.”

In cryptocurrencies, Bitcoin slid below $35,000 amid risk aversion. Second-largest token Ether also suffered heavy losses. Those moves suggest the most speculative areas of markets faces a painful period ahead.

Here are some events to watch this week:

• EIA crude oil inventory report Thursday
• Fed officials Loretta Mester and Raphael Bostic speak Thursday
• U.S. new home sales, GDP, initial jobless claims Thursday
• U.S. consumer income, U.S. durable goods, PCE deflator, University of Michigan consumer sentiment Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 2.1% as of 5:46 a.m. in London. The S&P 500 fell 1.8%
• Nasdaq 100 futures slid 2.5%. The Nasdaq 100 fell 2.6%
• Japan’s Topix index fell 1.4%
• Australia’s S&P/ASX 200 index fell 3%
• South Korea’s Kospi index shed 2.7%
• Hong Kong’s Hang Seng index fell 3.2%
• China’s Shanghai Composite index lost 1.5%
• Euro Stoxx 50 futures slid 3.7%

Currencies

• The Japanese yen was at 114.58 per dollar, up 0.4%
• The offshore yuan traded at 6.3221 per dollar
• The Bloomberg Dollar Spot Index rose 0.4%
• The euro was at $1.1229, down 0.7%

Bonds

• The yield on 10-year Treasuries fell 12 basis points to 1.87%
• Australia’s 10-year bond yield was at 2.16%, down 11 basis points

Commodities

• West Texas Intermediate crude rose 5.2% to $96.87 a barrel
• Gold was at $1,942.61 an ounce, up 1.8%

Source By: https://www.bloomberg.com/news/articles/2022-02-23/stock-slide-may-deepen-as-ukraine-tensions-worsen-markets-wrap