Stocks are set for another session of losses Monday as oil hits the highest levels since the global financial crisis and Russia deepens its military offensive into Ukraine.
Updated at 7:23 am EST
U.S. equity futures slumped lower Monday, while oil prices surged to the highest levels in more than a decade, as Russian forces continue to pound targets in Ukraine, while possibly preparing for an assault on the capital Kiyv, and world leaders extend discussions on banning crude imports from Moscow.
Russia’s offensive into its eastern European neighbor, a move that has drawn nearly unanimous condemnation from world leaders, continued into its second week Monday as Vladimir Putin offered so-called “humanitarian corridors” to transport an estimated 1.5 million refugees from pulverised cities in the eastern region of Ukraine.
The offer was dismissed as ‘immoral’ by Kyiv, however, as officials warned it could be a precursor to an all-out assault on the capital later this week.
Talks aimed at banning the import of Russia’s 5 million barrels of daily crude output, alongside concerns over supply disruption and the delay of nuclear talks between the U.S. and Iran, sent oil prices soaring again Monday, adding even further upward pressure on food and commodity prices as inflation rates hold at the highest levels in four decades.
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Delays in talks between the U.S. and Iran linked to Tehran’s nuclear program also added upward price pressures, with investors now focused on any near-term reaction from Saudi Arabia and other OPEC members, who only last week held their monthly output increase to 400,000 barrels per day following a meeting in Vienna.
WTI futures for April delivery were marked $8.52 higher at $124.19 per barrel while Brent contracts for the same month surged $8.39 to $126.47 per barrel, the highest in more than a decade.
Average U.S. gasoline prices, meanwhile, topped $4 a gallon for the first time since 2008 last week, and are now within touching distance of the all-time high of $4.103, according to the consumer website Gasbuddy.com
“Financial conditions in the US have tightened the most since the euro crisis in 2011, but the numbers are not including the last two weeks covering the Russian invasion in Ukraine,” said analysts at Saxo Bank. “It is quite likely that financial conditions are now tightening at the fastest pace since the great financial crisis which will continue to put downward pressure on equities.”
In Europe, stocks were a sea of red, with Germany’s DAX performance index falling 2.6% on the session and taking the benchmark into bear market territory. Britain’s FTSE 100 was down 1%, with support coming from energy and mining companies, while the region-wide Stoxx 600 fell 1.85% to a near 52-week low of 413.74 points.
In the U.S. the CBOE’s VIX volatility gauge surged another 15.5% to 35.20 points in overnight trading, setting up another wild session on Wall Street as markets track both headlines from the Russian invasion and reports of a potential ban on crude imports over the course of the day.
Futures contracts linked to the Dow Jones Industrial Average are priced for a 330 point opening bell decline, a move that would take the average to its lowest levels in nearly a year, while those linked to the S&P 500, which is down 9.18% for the year, are priced for a 42 point retreat.
Nasdaq Composite futures are indicating a 210 point slump for the tech-focused benchmark as 10-year Treasury note yields fell to 1.739% in overnight trading.
U.S. oil majors were also on the move, with Exxon Mobil (XOM) – Get Exxon Mobil Corporation Report rising 2.03% to $85.80 in pre-market trading and Chevron (CVX) – Get Chevron Corporation Report jumping 2.29% to $162.28 each.
Occidental Petroleum (OXY) – Get Occidental Petroleum Corporation Report, meanwhile, surged 8% to $60.60 each following reports that activist investor Carl Ichan has sold his 10% stake in the group, while billionaire investor Warren Buffett boosted his holdings by 30 million shares, taking his stake to 11.2%.
Bed, Bath & Beyond (BBBY) – Get Bed Bath & Beyond Inc. Report shares, meanwhile, soared 68.5% to $27.25 each after an investment group backed by GameStop (GME) – Get GameStop Corp. Class A Report chairman and Chewy.com founder Ryan Cohen — RC Ventures — revealed a 10% stake in the home furnishings retailer.
Apple (AAPL) – Get Apple Inc. Report shares moved lower as well, but slightly outpaced the broader market, ahead of the tech giant’s first product event of the year this week that is likely to include product updates and a price cut for the iPhone SE.
