GLOBAL MARKETS – Crude surges, stocks slide, ruble slumps to record low on tough Russian sanctions
Band Kevin Buckland
TOKYO, February 28 (Reuters) – Crude oil jumped as the ruble plunged nearly 30% to a record low on Monday after Western countries imposed tough new sanctions on Russia for its invasion of Ukraine, including blocking some banks from the system SWIFT global payment system.
Demand for safe havens boosted bonds, along with the dollar and yen, while the euro fell after Russian President Vladimir Putin put nuclear forces on high alert on Sunday, the fourth day of the biggest assault on a European state since World War II.
Rising tensions have raised fears that oil supplies from the world’s second largest producer could be disrupted, sending Brent crude LCOc1 futures up $4.21 or 4.3% to $102.14. US Crude West Texas Intermediate (WTI) CLc1 futures rose $4.58 or 5.0% to $96.17 a barrel.
“I tell clients that all we know for certain is that energy prices will rise and there will be beneficiaries,” said John Milroy, financial adviser to Ord Minnett in Sydney.
“It’s an old cliché, but it’s true that uncertainty drives movement in both directions.”
Asia-Pacific stocks fell after spending the morning session mostly in the green, putting them in line with declines in US and European stock futures.
Japan Nikkei 225 .N225 fell 0.25%, while Chinese blue chips .CSI300 down 0.36%. The Australian benchmark .AXJOhowever, added 0.64%, boosted by energy shares.
The MSCI Regional Equity Index .MIAP00000PUS lost 0.58%.
U.S. emini stock futures ESCv1 were pointing to a 2.35% drop on the restart, while the pan-European EURO STOXX 50 futures STXEc1 slipped 3.90%. FTSE futures contracts FFIc1 down 1.21%.
“We had a deluge of very negative news this weekend,” said Kyle Rodda, market analyst at IG Australia. “We talk about risks to financial stability, and sprinkle on top of that the threat of nuclear war.”
“Volatility is heightened,” he said. “Price action is incredibly choppy.”
The 10-year US Treasury yield US10YT=RR fell around 9 basis points to 1.89%, and Australian yields matched AU10YT=RR fell about 6 basis points to 2.177%.
euro EUR=EBS slipped 1.1% to $1.11465 and 1.1% to 128.785 yen EURJPY=EBSwhile the risk-aware Aussie AUD=D3 and New Zealand dollars USD=D3 fell 0.78% and 0.88%, respectively.
The ruble RUB=EBS plunged as much as 29.67% to hit a record high of 119.5 to the dollar.
Gold XUA= rose more than 1% to around $1,909 on demand for the safest assets.
“This volatility is going to go on for some time yet, until the dust settles,” said Shane Oliver, chief economist at AMP Capital.
In the meantime, “markets are going to swing from headline to headline,” he said.
Global exchange rates since the beginning of the yearhttp://tmsnrt.rs/2egbfVh
Overall Asset Performance http://tmsnrt.rs/2yaDPgn
(Reporting by Kevin Buckland; Additional reporting by Scott Murdoch and Alun John; Editing by Stephen Coates)
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