European stocks fall with US equity futures; crude oil rises

Bloomberg

A fresh wave of volatility hit global markets as the conflict in Ukraine intensified amid mounting penalties against Russia. Stocks in Europe fell along with US equity futures, while bonds gained and oil pushed sharply higher.
Utilities, car makers and travel stocks lead a decline of more than 1% in the Stoxx Europe 600 index as traders assessed the effect of sanctions. Basic resources was the only sector in the green as commodity prices extended a rally. Bayer AG gained after positive results, but warned that the Ukraine conflict poses a risk to its outlook. Futures on the S&P 500 and Nasdaq 100 declined, signalling a weak US open.
Treasury yields dipped and the dollar was steady. Bonds throughout Europe gained, with Germany’s 10-year yield dropping as much as eight basis points and spreads on peripheral notes widening. Oil rose as traders balanced the possible release of emergency stockpiles against fears of disruption to Russian energy exports.
Hopes of an early negotiated settlement faded as Russia escalated shelling overnight of key cities in Ukraine while its troops on the ground moved slowly in a large convoy toward the capital, Kyiv. Italian Prime Minister Mario Draghi said that Russian President Vladimir Putin’s threat to resort to nuclear weapons requires a “swift, firm, united reaction.” Moscow imposed capital controls as Putin sought countermeasures against fresh sanctions walloping the economy.
Russia’s ruble stabilised after its worst plunge on record, though the wide indicative bid-ask spreads highlighted ongoing challenges. The Moscow stock market remains closed for a second day on Tuesday. There’s a growing risk that Russia’s stocks and bonds could be kicked out of major investment benchmarks as they become increasingly hard to trade.
Markets have been whipsawed by the conflict and steps to isolate commodity-rich Russia. Disruptions to supplies of raw materials such as grain and energy threaten to stoke already-high inflation and hamper growth, just as the Federal Reserve prepares to raise interest rates. Lenders worldwide are already making it harder to finance transactions involving Russian resources.
Elsewhere, an Asia-Pacific equity gauge rose for a third session, aided by a climb in Japan. An index of emerging-market stocks rose.
The Stoxx Europe 600 fell 1.7% in London. Futures on the S&P 500 fell 0.7%. Futures on the Nasdaq 100 fell 0.9%. Futures on the Dow Jones Industrial Average fell 0.6%. The MSCI Asia Pacific Index rose 0.6%. The MSCI Emerging Markets Index rose 0.7%.
The Bloomberg Dollar Spot Index was little changed. The euro fell 0.4% to $1.1178. The Japanese yen rose 0.1% to 114.83 per dollar. The offshore yuan was little changed at 6.3152 per dollar. The British pound was little changed at $1.3408. The yield on 10-year Treasuries declined two basis points to 1.80%.