The price of oil jumped above $100 a barrel for the first time since 2014 and Asian stocks fell on Thursday as Russia launched an invasion of Ukraine, prolonging market turmoil in the United States and in Europe which had been fueled by fears of a large-scale attack. .
Wall Street was poised to tumble at the start of trading, with futures pointing to a 2% drop in the S&P 500.
Japan’s Nikkei 225 was down just over 2.1% in the early afternoon. In Hong Kong, the Hang Seng index fell 3.1%, while the Kospi composite index in South Korea fell 2.7%. The price of Brent crude oil, the global benchmark, rose 5% to nearly $102 a barrel.
Global markets have generally deteriorated in recent days. The Stoxx Europe 600 reversed early gains to fall 0.3% on Wednesday. The S&P 500 posted its fourth consecutive day of losses, shedding 1.8% and slipping deeper into correction territory – a drop of more than 10% from a recent high. It is now 11.9% off its January 3 peak.
News from Ukraine became increasingly dire on Thursday. Russian President Vladimir V. Putin ordered the launch of a “special military operation”, and the Ukrainian government confirmed that several cities were under attack. Cyberattacks have also knocked out government institutions in Ukraine.
The Moscow Stock Exchange halted trading and the ruble fell to a record low against major currencies.
A full-scale invasion could have broad effects on commodities including oil, natural gas, wheat and metals. Europe is heavily dependent on Russia for energy, and parts of the Middle East and Africa get most of their wheat from Russia and Ukraine. Even if supply chains remain intact and Russian exports are unaffected by the sanctions, there are fears that Mr Putin could cut supplies in a punitive way.
Few Russian exports are heading directly to the United States, but disruptions anywhere could push prices up, prolonging inflation that has already lasted longer than authorities had expected. The Federal Reserve has signaled it is preparing to raise interest rates, with the aim of curbing inflation by slowing spending, giving supply time to catch up. But higher rates will also dampen growth, and doing so when markets are already down risks prolonging the downturn.
US stocks had been flirting with a correction for weeks as investors worried about how quickly the Federal Reserve would raise rates. The S&P 500, the US benchmark, had breached the 10% threshold several times in intraday trading, but rose by the end of trade. Tech stocks, in particular, have fallen well off their highs, and the tech-heavy Nasdaq composite is 18.8% below its November high. It is approaching a decline that indicates an even worse change in sentiment on Wall Street: a bear market, or a 20% decline.
Anton Troyanovsky contributed report.