Markets around the world have slumped following Russia’s full-scale invasion of Ukraine. Dow futures fell by 655 points, European stocks dropped 2.75% and the Russian rouble hit a record low. Conversely, the price of oil skyrocketed to over $100 as the markets struggled to predict what could happen next.
Thursday morning was particularly difficult for the US stock futures. Dow futures slipped 1.98% and futures on the S&P 500 were also down 1.99%. Hardest hit were Nasdaq futures that shrank by 2.65%. It followed a typically cautious day of trading on Wall Street where the Dow slipped 1.3%, the S&P 500 fell 1.8% and the Nasdaq Composite lost 2.6% of its value.
Europe’s major stock markets also tumbled following the news. The main markets all opened between 2.5% and 4% lower and the STOXX 600 index lost 2.75% to hit its lowest mark since May 2021 despite having hit a record high this January.
The German DAX was especially hard hit in the stock market turmoil with a loss of 3.7%. Much of this is due to the fact that the DAX is heavily exposed to Russian energy supplies. Cryptocurrencies also had a hard day with Bitcoin losing 8% of its value to hit a low of $34,702.
The Russia and Ukraine markets obviously fell through the floor. The Russian rouble lost nearly 7% of its value while the Moscow stock exchange lost over 10% of its value. As a result, the Russian central bank was forced to issue a ban on any short selling for the foreseeable future.
While stock markets were in turmoil, the price of oil went through the roof. Brent crude passed the $100 barrier for the first time since 2014 to reach an astonishing $102.60 per barrel. Similarly, futures on oil-related brands like West Texas Intermediate rose 5.61%. There were also rises in value for metals such as gold that experienced a boost of 1.7% to hit its best price since January 2021.
A cautious time for the markets
Given the uncertainty over the Russian-Ukraine conflict, it is little wonder that the markets didn’t fare much worse on Thursday morning. After all, the economy has already been ravaged by a pandemic and soaring inflation rates.
However, the central question now is whether the Federal Reserve will forge ahead with the planned interest rate hikes that were due to counter an overheating economy. With fuel prices going through the roof, the Fed must manage a tricky balancing act in keeping inflation in check while helping the US economy recover from the pandemic.
Such uncertainty is obviously bad for the markets as few investors will want to be exposed to risk given the formidable challenges of war, inflation and a pandemic. All of which points to a tricky few days ahead for the markets in the US and beyond.