US stock futures opened down on Monday morning as market uncertainty continued ahead of an expected conflict between Russia and Ukraine. The Dow, S&P 500 and NASDAQ all slipped as talks aiming to defuse the situation stalled. This followed big losses on the European stock market earlier in the day.
Futures on the NASDAQ 100 were hardest hit with a drop of 1%. S&P 500 futures were close behind with a fall of 0.8% while futures on the Dow Jones Industrial Average fell by 0.7%. This followed on from the previous week where all of the above indices fell by over 1%.
With Friday seeing the US government issuing a warning that war could break out soon, the NASDAQ lost 2.8% while traders rushed to buy Treasurys. There was also a notable jump in the energy markets with gas futures trading nearly 5% higher on Monday and there was an equally strong surge for oil prices. Some analysts have speculated that oil could reach $120 a barrel if talks fail and Russia invades Ukraine.
Things have been even worse on the European stock markets with the DAX index in Germany falling 3.4%. There has also been trouble on the Russian markets with the MOEX Russia Index slipping 3.4% and the RTS Index losing 4.9% of its value.
A troubled 2022 on the markets
The flair-up of tensions between Russia and Ukraine was the last thing that global markets needed in their bid to recover after the ravages of the Covid-19 pandemic. While Russia has repeatedly cast its shadow over its neighbor in the past decades, this month has seen things getting much worse.
Already there are big changes in terms of how business in the region is being conducted with flights to Ukraine being redirected or even completely halted. Such uncertainty only plays into a stock market that has already experienced plenty of jitters in 2022.
Much of the year is expected to be occupied with how the markets handle numerous interest rate hikes that are planned to begin in 2022. Such interest rate rises will be introduced in a bid to stave off some of the worst inflation rates since the early 1980s.
The conflict between Russia and Ukraine has the potential to destabilize the region and shake up the world order. In particular, it’s the fear that China might ally itself with Russia that is the most troubling aspect. Relations between the US and China have been particularly poor recently and a further deterioration would have a big impact on global economies.
All of which has meant that investors are expected to stay away from the riskier kinds of investments such as big tech stock as well as cryptocurrencies. Recently there have been major stock market falls for tech brands like Netflix and Facebook, and unless the situation between Russia and Ukraine is defused, it could be a very troubling 2022 for the markets.