Stocks plunged and oil prices surged by more than $8 per barrel Thursday after Russian President Vladimir Putin launched military action in Ukraine, prompting Washington and Europe to vow sanctions on Moscow that may roil the global economy.
Market benchmarks in Europe and Asia fell by more than 4% as traders tried to figure out how large Putin’s incursion would be and the scale of Western retaliation. Wall Street futures sank, indicating that U.S. shares were likely to retreat after trading opens.
Energy prices surged, fueling inflation fears. The spot price in Europe for natural gas, for which the continent relies on Russia to supply, jumped as much as 31%.
Brent crude oil jumped above $100 per barrel in London for the first time since 2014 on unease about possible disruption of supplies from Russia, the No. 3 producer. Benchmark U.S. crude briefly surpassed $98 per barrel. Prices of wheat and corn also jumped.
The ruble sank 7.5% against the dollar.
Financial markets are in a “flight to safety and may have to price in slower growth” due to high energy costs, Chris Turner and Francesco Pesole of ING said in a report.
In Brussels, the president of the European Commission said Thursday the 27-nation European Union planned “massive and targeted sanctions” on Russia.
“We will hold President Putin accountable,” Ursula von der Leyen said.
The FTSE 100 in London fell 3.1% to 7,263.75 after Europe awakened to news of explosions in the Ukrainian capital of Kyiv, the major city of Kharkiv and other areas. The DAX in Frankfurt plunged 4.8% to 13,936.29 and the CAC in Paris lost 4.5% to 6,472.93.
Moscow’s stock exchange briefly suspended trading on all its markets on Thursday morning. After trading resumed, the rouble-denominated MOEX stock index and dollar-denominated RTS index both tumbled by about a third.
The futures for Wall Street’s benchmark S&P 500 index and the Dow Jones Industrial Average were off by more than 2%.
That was on top of Wednesday’s 1.8% slide for the S&P 500 to an eight-month low after the Kremlin said rebels in eastern Ukraine had asked for military assistance. Moscow had sent soldiers to some rebel-held areas after recognizing them as independent.
Putin said Russia had to protect civilians in eastern Ukraine, a claim Washington had predicted he would make to justify an invasion.
President Joe Biden denounced the attack as “unprovoked and unjustified” and said Moscow would be held accountable, which many took to mean Washington and its allies would impose additional sanctions.
Putin accused them of ignoring Russia’s demand to prevent Ukraine from joining NATO and to offer Moscow security guarantees.
Washington, Britain, Japan and the EU earlier imposed sanctions on Russian banks, officials and business leaders.
Additional options include barring Russia from the global system for bank transactions.
The price for oil on international markets smashed through $100 per barrel while benchmark U.S. crude flirted with that level.
West Texas Intermediate soared $7.65 to $99.75 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 25 cents to $92.10 on Wednesday.
Brent crude advanced $8.48 to $105.32 per barrel in London to its highest level since 2014. It lost 20 cents to $94.05 the previous session.
In Asia, the Nikkei 225 in Tokyo fell 1.8% to 25,970.82 and the Hang Seng in Hong Kong lost 3.2% to 22,901.56. The Shanghai Composite Index shed 1.7% to 3,429.96.
Asian economies face lower risks than Europe does, but those that need imported oil might be hit by higher prices if Russian supplies are disrupted, forecasters say.
Investors already were uneasy about the possible impact of the Federal Reserve’s plans to try to cool inflation by withdrawing ultra-low interest rates and other stimulus that boosted share prices.
The dollar weakened to 114.78 yen from Wednesday’s 114.98 yen. The euro fell to $1.1161 from $1.1306.