U.S. stock futures declined in the early morning trading on February 28, as traders continued to weigh the economic consequences of the full-blown war that Russia declared against Ukraine last Thursday. Futures contracts tied to the Dow Jones Industrial Average (DJIA) slid 1.47%, while S&P 500 (SPX) futures and Nasdaq 100 (NDX) futures moved 2.08% and 2.21% southward, respectively.
Markets were volatile across the globe last week; the first half of the week was spent in anticipation of war and the latter half was spent worrying about the repercussions of the mounting war. Russian forces continued to advance into Ukraine through the weekend.
World Acts Against Russia
Last week, U.S. President Joe Biden announced several phases of sanctions against Russia’s banks, sovereign debt, President Putin, and Foreign Minister Sergei Lavrov.
Most importantly, on Saturday, the U.S. and its European allies, and Canada, decided to bar key Russian banks from the global interbank messaging network, SWIFT.
Moreover, the Russian central bank’s foreign currency reserves held in the West were also frozen, in an economic sabotage attempt against Russia.
Additionally, the U.S. and European Union also penalized Russian aircraft from entering their airspace.
Germany pledged 100 billion euros (around $112.7 billion) to embolden its armed services. Moreover, the country also agreed to send 1,000 anti-tank weapons and 500 Stinger missiles to Ukraine.
As global sanctions against Russia increased in response to the invasion, the Russian ruble plunged almost 30% against the U.S. dollar early Monday morning. This led Russia to hike its interest rates from 9.5% to 20% in order to cushion the economy against its crashing currency.
Markets React
The escalations in the Russia-Ukraine situation made investors across the globe cautious. The pan-European Stoxx 600 index shed 1.3% in early trade, led by the losses in banks.
Moreover, fear of export disruptions of oil and gas from Russia led oil prices to jump. The international oil benchmark, Brent crude, touched 7% during the morning trading hours.
It is important to note that Russia is a major global producer and supplier of key commodities like oil, gas, palladium, nickel, wheat, and corn, especially for the U.S. Recently, Goldman Sachs projected a spike in the prices of these commodities as Russia continues to be isolated politically and economically in response to its violent attack on Ukraine.
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