By
Steve Muchoki
April 16th, 2024
Both US and global equities and commodities saw volatile trading throughout last week following an escalated showdown between Russia and Ukraine.
US stock market futures plummeted during the pre-trading session on Monday as investors remain concerned about Russia’s increased aggression against Ukraine and a new set of sanctions introduced against Russia. For instance, the Dow Jones Industrial Average futures plunged 515 points, while the S&P 500 futures plunged by 2.12%. In addition, stock futures tied to the NASDAQ 100 declined by 2.3%.
From a weekly perspective, the DJIA has dipped by less than 0.1%, while the S&P 500 and the tech-heavy NASDAQ Composite climbed 0.8% and 1.1% respectively. With the latest development, both benchmark indexes wiped out losses incurred from earlier in the week.
Meanwhile, the price of oil continues to flirt at higher price levels. For example, futures pegged to the US West Texas Intermediate (WTI) crude rose more than 4% on Sunday to approximately $95.60 per barrel. In addition, the April Brent crude futures contract also advanced upwards by 4% to around $102 per barrel.
Sanctions against Russia and Other Developments that Caused Stock Market Futures to Plunge
Both US and global equities and commodities saw volatile trading throughout last week following an escalated showdown between Russia and Ukraine. This culminated in a military invasion by Russia early Thursday morning into Ukraine using airstrikes and shelling. Throughout the weekend, landmark locations in Ukraine, including its Chernobyl nuclear plant site and its second-largest city Kharkiv, were under Russian siege.
US President Joe Biden decried the attack by his Russian counterpart Vladimir Putin on Ukraine and vowed to respond with swift sanctions. Biden, who also convened a virtual meeting with other world leaders, including France’s Emmanuel Macron and Germany’s Olaf Scholz, said the sanctions will target Russia’s financial system. Part of this included removing major Russian banks from the interbank messaging system, SWIFT. Dennis DeBusschere of research platform 22V Research also echoed this saying:
“Some Russian banks being removed from SWIFT (energy transactions exempt) and the freezing of the Russian central bank’s access to its foreign currency reserves held in the West clearly increases economic tail risk.”
Ukraine Has Suggested that Possible Peace Talks with Russia Are on the Cards
On Sunday, Putin put Russia’s nuclear deterrence forces on high alert, amid growing backlash against his incursion into Ukraine. According to the Russian leader, this was in response to what he perceived as “aggressive statements” from NATO. Meanwhile, Ukraine’s Defense Ministry stated that representatives from both countries have agreed to meet. According to the Ministry, the meeting for potential peace talks will take place on the Ukraine-Belarus border. The Ministry described the potential dialogue as coming “with no preconditions”. According to Jim Paulsen, chief investment strategist for the Leuthold Group:
“Traders will be watching for any signs of resolution on the Russian crisis (negotiated peace or a sign of a near-term victory for either side) or for signs tensions could be worsening raising the chance of a world war involving NATO members.”
However, Ukrainian forces continue to exhibit valiant resistance to Russian encroachers on the battlefield in the meantime. In addition, any hopes of a swift resolution to the conflict seem bleak at the moment.