With Brent touching $95 a barrel and West Texas Intermediate at $93.78, talk of $100 oil no longer seems far fetched.
By Stephen Kirkland and Vildana Hajric and Peyton Forte Bloomberg
Stocks dropped, while investors sought safety in Treasuries as the U.S. warned Russia could take offensive military action against Ukraine as early as next week.
Risk assets added to weekly losses as the U.K. and U.S. advised citizens to leave Ukraine as tensions with Russia rise. Oil spiked higher as a Russian attack could lead to harsh sanctions from the U.S. Russia has repeatedly rejected charges it plans to invade Ukraine.
The S&P 500 fell 1.9% and the Nasdaq 100 dropped more than 3%, following Thursday’s steep declines amid bets on faster Federal Reserve tightening. Treasuries caught bids, with the 10-year yield sinking 11 basis points to about 1.92%. Oil climbed, with brent crude hitting $95 a barrel for the first time since 2014.
For months, the U.S. has been warning European allies that Russia may be preparing to invade Ukraine, massing almost 130,000 troops near the border and staging the largest joint military drills in years in neighboring Belarus. The U.S. has warned of debilitating economic sanctions if Russia attacks, while the Kremlin says NATO expanding further east or deploying weapons in Ukraine are red lines.
The S&P 500 fell 1.9% and the Nasdaq 100 dropped more than 3%, following Thursday’s steep declines amid bets on faster Federal Reserve tightening. Treasuries caught bids, with the 10-year yield sinking 11 basis points to about 1.92%. Oil climbed, with brent crude hitting $95 a barrel for the first time since 2014.
For months, the U.S. has been warning European allies that Russia may be preparing to invade Ukraine, massing almost 130,000 troops near the border and staging the largest joint military drills in years in neighboring Belarus. The U.S. has warned of debilitating economic sanctions if Russia attacks, while the Kremlin says NATO expanding further east or deploying weapons in Ukraine are red lines.
Inflation concerns weighed on U.S. consumer sentiment, which declined further in early February to a fresh decade low as views about personal finances deteriorated. The University of Michigan’s sentiment index dropped to 61.7, the lowest since October 2011, from 67.2 in January. Consumers expect an inflation rate of 5% over the next year, up from last month’s reading of 4.9% and the highest since 2008.
“Investors are worried that the economy is also slowing just at the worst time, just as the Fed is about to raise interest rates, which could threaten the health of this expansion and bull market,” said Sam Stovall, chief investment strategist at CFRA Research. “Add to it the geopolitical tensions and I think it’s very good reasons why we now have the volatility that we do.”
For more market analysis, read our MLIV blog.
Here are the main market moves:
Stocks
- The S&P 500 fell 1.9% as of 4 p.m. New York time
- The Nasdaq 100 fell 3.1%
- The Dow Jones Industrial Average fell 1.4%
- The MSCI World index fell 1.6%
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.8% to $1.1341
- The British pound was little changed at $1.3551
- The Japanese yen rose 0.6% to 115.31 per dollar
Bonds
- The yield on 10-year Treasuries declined 11 basis points to 1.92%
- Germany’s 10-year yield advanced one basis point to 0.30%
- Britain’s 10-year yield advanced two basis points to 1.54%
Commodities
- West Texas Intermediate crude rose 4.3% to $93.78 a barrel
- Gold futures rose 1.5% to $1,864.60 an ounce
–With assistance from Sunil Jagtiani, Akshay Chinchalkar and Robert Brand.
SOURCE: BLOOMBERG / Al Jazeera
