Futures drop, European stocks slide as Ukraine war escalates

Bloomberg

US futures slid and European equities tumbled to a one-year low as war risks intensified after a Ukrainian nuclear power plant briefly caught fire.
Contracts on US gauges signalled more losses for Wall Street as investors awaited the monthly jobs report. Europe’s Stoxx 600 benchmark fell nearly 3%, poised for its worst week since March 2020. An Asian equity index also slipped.
Risk appetite in global markets has plummeted after Russia’s invasion of its neighbour and the ensuing sanctions by the US and its allies, while commodities are surging on supply concerns. S&P 500 futures initially slumped as Ukraine said a nuclear plant was on fire after Russian shelling of the area, before coming off lows as the blaze was contained.
Treasuries and gold climbed amid haven demand, while oil headed for its biggest weekly surge in almost two years. The dollar gained and the euro slipped.
The intensifying war is prompting investors to exit European equities like never before amid rising inflation risks, according to Bank of America Corp strategists. Financial stocks also saw record outflows, they wrote citing EPFR Global data.
The cost of protection against default from a basket
of high-grade European companies rose above 80 basis points for the first time since May 2020.
“The market mood is deep red,” said Ipek Ozkardeskaya, senior analyst at Swissquote. “European stocks continue feeling the pinch of an escalating war, as the US major indices remain under a decent selling pressure. Investors are unlikely to open or to hold a long position without putting a hedge
on it.”
The Russian stock market will be closed to trading until at least next Wednesday, marking a record in the country’s modern history, in a bid to stave off the impact of global sanctions for domestic investors.
Traders are also awaiting the US jobs report for clues on the monetary policy outlook, after Federal Reserve Chair Jerome Powell reaffirmed the central bank is set to start a series
of interest-rate hikes to curb inflation.
Elsewhere, Gap Inc climbed in premarket trading after its earnings topped estimates.
The Czech and the Polish central banks stepped in to protect their currencies, which are among the hardest hit by the market impact of Russia’s invasion of Ukraine.
The European Union is bracing for potentially severe economic consequences should Russia cut off natural gas supplies in retaliation for sanctions.
Russian troops are encircling Ukraine’s capital, Kyiv, while continuing attempts to advance on the port city of Mariupol in the south, the general staff of the Ukrainian army said, adding that preparations continue for the landing of Russian assault troops near Odesa.
Futures on the S&P 500 fell 0.7% in New York. Futures on the Nasdaq 100 fell 0.7%. Futures on the Dow Jones Industrial Average fell 0.7%. The Stoxx Europe 600 fell 2.8%. The MSCI World index fell 0.8%.
The Bloomberg Dollar Spot Index rose 0.3%. The euro fell 0.5% to $1.1014. The British pound fell 0.3% to $1.3307. The Japanese yen was little changed at 115.42 per dollar.
The yield on 10-year Treasuries declined five basis points to 1.79%. Germany’s 10-year yield declined three basis points to -0.01%. Britain’s 10-year yield declined two basis points to 1.28%.
West Texas Intermediate crude rose 1.9% to $109.70 a barrel. Gold futures rose 0.6% to $1,946.60 an ounce.