US stock futures fell sharply after Russia took seriously its invasion plans and moved the military across the national border into Ukraine. The invasion caused Wall Street’s major indexes to drop just above 2% in pre-trading on Thursday.
The drop was sharp at the opening of trading on Thursday. The Dow is down 2.55 percent, the S&P is down 2.5, while the tech-heavy Nasdaq is down more than 2.7 percent right after the open. Indices recovered throughout the trading day. The high-tech Nasdaq was at one point in a positive state, but declined again. The decline in the Dow and S&P remains significant.
This is what the leading US stock market indices look like on Thursday:
- The industry-heavy Dow Jones index fell by 2.01 percent.
- The Nasdaq Technology Index fell 0.40 percent.
- The broad S&P 500 index fell 1.23 percent.
Dow futures fell 810 points in pre-trading, or 2.4 percent, while futures related to the S&P 500 fell 2.5 percent, and are in a correction after dropping more than ten percent since the top. Nasdaq 100 futures responded the most, dropping as much as three percent. The index is about to enter a so-called bear market, that is, it is down more than 20 percent from the top.
Market reaction to the Russian invasion of Ukraine:
- US stock market indices fell more than 2% in pre-trading on Thursday.
- The stock market slump affected the stock markets in Asia and Europe on Thursday.
- On the other hand, energy companies are witnessing an increase with the price of raw materials increasing further as a result of the situation.
- The price of North Sea Brent spot oil, which is used as a reference price for oil trade worldwide, jumped 7.7 percent to $104.56 a barrel. Thus, the price of oil crossed the $100 level for the first time since 2014.
- European gas prices are rising sharply: The Dutch monthly contract jumped more than 40 percent to 125 euros per megawatt-hour on Thursday, Bloomberg reported.
- In the fixed income market, there is also movement, and the US fell for ten years above 10 basis points Thursday night. Currently, the ten-year-old is trading at 1.87 per cent. At the same time, interest rate expectations in the United States have subsided after the outbreak of the war in Ukraine.
The market is in panic mode
Energy companies’ prices rose as a result of higher commodity prices. Devon Energy rose 5 percent and Chevron rose 4.2 percent in pre-market trading.
The Russian invasion of Ukraine put the markets in a state of panic. Investors are throwing stocks out of their portfolios and fleeing to safe havens, says Alexander Zumpvi, chief broker at Heraeus Metals Germany GmbH & Co.
The benchmark US 10-year benchmark for 10-year bonds fell to 1.86 percent as investors preferred to look for safer bonds, according to CNBC.
Banking stocks were among the biggest losers early on, with Bank of America down four per cent and Bank of New York Mellon down 6.3 per cent in pre-market trading.
Several penalties add to the unrest
Leading politicians in the European Union and the United States are expected to respond with massive “unparalleled” sanctions, and today US President Joe Biden is expected to adopt “serious” sanctions against Russia and personally against the country’s President Vladimir Putin.
On Thursday, it is expected to know the penalties that will be imposed, which will be decisive for the development of the stock market indices on Wall Street.
For its part, the Russian authorities asked the countries of the West to maintain relations with the state, despite the fact that the country attacked Ukraine.
The stock market has been marked by turmoil since the beginning of the year, but after the situation with Russia escalated, the stock market turmoil increased significantly. The economic recovery following the pandemic has led to inflationary pressures, and monetary policy tightening and interest rate hikes have been announced, also contributing to the stock market turmoil.
Wall Street saw sharp volatility on Wednesday and the Dow Jones index ended down 464 points, or 1.3 percent. At the time of closing, the index was at its lowest level so far this year. The S&P 500 plunged 1.8 percent, extending further into the correction, ending the day 12 percent lower from a record high on January 3. The tech-heavy Nasdaq Composite lost 2.6% and is now close to bear market territory.(Terms)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.
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