US stock futures began to decline as oil prices continued to rise, as investors assessed Russia’s invasion of Ukraine and the impact of a spike in commodity prices on inflation and the Federal Reserve’s monetary policy.
The S&P 500 futures fell 0.1 percent on Thursday. On Wednesday, the broad market index climbed. On Thursday, futures for the Nasdaq-100, which is centered on technology, sank 0.4 percent, while futures for the Dow Jones Industrial Average fell 0.2 percent.
Crude prices have risen beyond $115 per barrel for the first time since 2008, as refiners refuse to accept Russian crude, restricting global energy supplies. Brent crude prices jumped 3.5 percent to $116.93 a barrel, the international benchmark. Investors are concerned that a sustained rise in oil prices could signal a stagflationary combination of slower growth and greater inflation.
Natural-gas prices in Europe increased by 8 percent this week, adding to a recent spike. Investors are concerned that the battle may interrupt the supply of natural gas to Europe. According to estimates, around a third of Russian gas exports to Europe pass through Ukraine.
The invasion of Ukraine by Russia has injected instability into global markets. Investors are attempting to determine how a boycott of Russian commodities, such as oil, will contribute to already high inflation and how aggressively central banks will raise interest rates in the face of increased pricing pressures and an uncertain economic outlook. Chairman Jerome Powell of the Federal Reserve indicated on Wednesday that at the central bank’s meeting in two weeks, he will suggest a quarter-percentage-point rate hike.
The Stoxx Europe 600 index fell 0.2 percent on Thursday. The Russian stock markets have been shuttered for the fourth day in a row as the government attempts to contain a firesale by imposing capital controls on the ruble.
Trading in more than 50 Russian stocks has been halted by the London Stock Exchange Group. MSCI Inc. and FTSE Russell have announced that Russian equities would be removed from their benchmarks next week, while S&P Dow Jones Indices is considering doing the same.
According to FactSet, the ruble lost 11.6 percent versus the dollar on Thursday, falling to 116 rubles per dollar. Traders claim that investors’ and brokers’ reluctance to handle the currency has restricted their ability to trade it. Nearby currencies have also depreciated against the dollar, as investors fear about economic spillover. Thursday, the Polish zloty sank 0.8 percent, while the Hungarian forint fell 0.7 percent.
The yield on the benchmark 10-year Treasury note increased to 1.870 percent from 1.862 percent on Wednesday in US bond markets. Yields and prices move in opposite directions.
Asia’s major stock indexes climbed substantially. The Kospi in South Korea increased by 1.6 percent, while the Nikkei 225 in Japan increased by 0.7 percent. The Shanghai Composite Index in China declined 0.1 percent.
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