Dow futures fall about 400 points as traders assess ripple effects of Russia sanctions

Traders on the NYSE trading floor, Feb. 24, 2022.

Source: NYSE

US stock futures fell in overnight trading on Sunday as investors worried about the economic fallout from the fighting between Russia and Ukraine.

Dow futures fell 403 points. S&P 500 futures fell 1.69% and Nasdaq 100 futures lost 1.83%.

US and global stocks saw volatile trading last week as geopolitical tensions between Russia and Ukraine escalated. Moscow launched military action in Ukraine early Thursday morning, local time.

The Russian advance into Ukraine continued throughout the weekend. Russian military vehicles entered Ukraine’s second-largest city, Kharkiv, with reports of fighting and residents warned to stay in shelters.

Russian President Vladimir Putin on Sunday put his country’s nuclear deterrent forces on high alert amid growing global resistance to the invasion. Ukraine’s defense ministry said representatives of Ukraine and Russia have agreed to meet “without conditions” at the Ukraine-Belarus border.

US West Texas Intermediate (WTI) crude futures rose more than 4% to about $95.60 a barrel on Sunday. April’s Brent crude oil futures contract also rose 4% to nearly $102 a barrel.

Stock Selection and Investment Trends from Slice Mag Pro:

Last week, President Joe Biden responded to the attack by announcing several rounds of sanctions against Russian banks, the country’s national debt and Putin and Foreign Minister Sergey Lavrov.

The US, European allies and Canada agreed on Saturday to remove major Russian banks from the SWIFT interbank messaging system.

“Some Russian banks are being removed from SWIFT (energy transactions exempt) and the freeze on the Russian central bank’s access to its foreign exchange reserves in the West is clearly increasing economic tail risk,” said Dennis DeBusschere of 22V Research.

However, he believes that Russia can still sell oil and that there could be “holes” in Russia’s frozen assets, which could “limit the catastrophe in the markets for a few days”.

According to Reuters, the Russian ruble would fall by at least 19%, while banks offered it for about 100 rubles per dollar. It closed Friday at 84 rubles per dollar.

Traders will look for signs of a resolution to the Russian crisis (negotiated peace or signs of a near-term victory for both sides) or signs that tensions may increase, raising the risk of a world war involving NATO members. is magnified,” he said. Jim Paulsen, chief investment strategist for the Leuthold Group. “As news trickles in in support of both theses, expect daily stock market action to remain volatile.”

Despite market volatility, the Dow had its best day since November 2020 on Friday.

Last week, the Dow recorded its third week of losses. The S&P 500 and Nasdaq ended the week in green at 0.8% and 1.1% respectively.

The Nasdaq Composite is still in correction, about 15% off the record. The Dow and S&P 500 are just outside the correction zone.

Federal Reserve Chairman Jerome Powell will testify twice before Congress in the next week, and he will be closely monitored for any signal about whether geopolitical events are likely to influence the Fed’s rate hikes.

Investors will also get an update on the labor department later in the week, as the February jobs report is expected Friday. In January 467,000 payrolls were added.