Russian Invasion Of Ukraine To Lead To Continued Selling On Wall Street

The major U.S. index futures are currently pointing to a sharply lower open on Thursday, as fears of a Russian invasion of Ukraine have become a reality.

The steep drop by the futures comes after Russian Vladimir Putin declared war on neighboring Ukraine late Wednesday night, officially calling the move a “special military operation.”

Rather than focusing on contested regions in the eastern part of the country as some had expected, Putin has seemingly launched an all-out invasion of Ukraine.

Reports of explosions and Russian troops crossing the border have come in from across Ukraine as part of what could be a prolonged campaign.

U.S. President Joe Biden and other world leaders have condemned Russia for the “unprovoked and unjustified attack,” which Biden predicted would cause a “catastrophic loss of life and human suffering.”

“Russia alone is responsible for the death and destruction this attack will bring, and the United States and its Allies and partners will respond in a united and decisive way,” Biden said in a statement. “The world will hold Russia accountable.”

The U.S. and other countries around the world are expected to impose more severe sanctions on Russia following the invasion, potentially targeting the country’s all-important energy sector.

The invasion has contributed to a spike in the price of crude oil, which topped $100 a barrel for the first time since 2014, raising concerns about even higher inflation.

The developments overseas have overshadowed a report from the Labor Department showed a modest decrease in first-time claims for U.S. unemployment benefits in the week ended February 19th.

Stocks moved sharply lower over the course of the trading day on Wednesday, extending the sell-off seen in recent sessions. The major averages moved to the upside early in the session but showed a substantial downturn as the day progressed.

The major averages saw further downside going into the close, ending the session near their worst levels of the day. The Dow plunged 464.85 points or 1.4 percent to 33,131.76, the Nasdaq dove 344.03 points or 2.6 percent to 13,037.49 and the S&P 500 plummeted 79.26 points or 1.8 percent to 4,225.50.

With the steep drop on the day, the S&P 500 and the Nasdaq ended the session at their lowest closing levels in eight and nine months, respectively, while the Dow tumbled to a nearly eleven-month closing low.

Bargain hunting contributed to initial strength on Wall Street, but buying interest waned shortly after the start of trading amid lingering concerns about a Russia invasion of Ukraine.

Selling pressure seemed to intensify after President Joe Biden officially announced plans to allow the toughest sanctions on Russia’s Nord Stream 2 gas pipeline to move forward.

Biden called the move another piece in his administration’s “initial tranche” of sanctions against Russia, arguing Russian President Vladimir Putin’s actions have “provided the world with an overwhelming incentive to move away from Russian gas and to other forms of energy.”

Ahead of the official announcement, an official told CNN the sanction of Nord Stream 2’s parent company, which the Biden administration previously blocked using a national security waiver, is “effectively a death knell to the project.”

Housing stocks moved sharply lower over the course of the session, dragging the Philadelphia Housing Sector Index down by 2.9 percent to its lowest closing level in almost a year.

Substantial weakness was also visible among airline stocks, as reflected by the 2.9 percent nosedive by the NYSE Arca Airline Index.

Retail stocks also saw significant weakness on the day, with the Dow Jones U.S. Retail Index plunging by 2.7 percent to a nearly one-year closing low.

The sell-off by retail stocks came even though Lowe’s (LOW) reported fourth quarter results that beat analyst estimates on both the top and bottom lines and raised its full-year earnings forecast.

Banking, semiconductor and biotechnology stocks also came under considerable selling pressure, while gold and natural gas stocks bucked the downtrend amid increases in the prices of their associated commodities.

Commodity, Currency Markets

Crude oil futures are soaring $7.57 to $99.67 a barrel after inching up $0.19 to $92.10 on Wednesday. Meanwhile, after rising $3 to $1,910.40 an ounce in the previous session, gold futures are spiking $53.10 to $1,963.50 an ounce.

On the currency front, the U.S. dollar is trading at 114.97 yen versus the 115.01 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1163 compared to yesterday’s $1.1307.

Asia

Asian markets nosedived on Thursday as Russia declared war against Ukraine, claiming the invasion is intended to protect civilians.

Investors sought shelter in safe-haven assets after Russia launched a military operation in Ukraine in what could be the start of war in Europe over Russia’s demands for an end to NATO’s eastward expansion.

The world will hold Russia accountable for the death and destruction due to the “unprovoked” and “unjustified” attack on Ukraine and the U.S. and its allies will respond in a “united and decisive” way, U.S. President Joe Biden has warned.

China’s Shanghai Composite Index dropped 59.19 points, or 1.7 percent, to 3,429.96, tracking a sell-off across global equities. Hong Kong’s Hang Seng Index plummeted 758.72 points, or 3.2 percent, to close at 22,901.56.

Japanese shares hit a 15-month low as Russia finally invaded Ukraine, firing missiles at several Ukrainian cities and landing troops on Ukraine’s south coast, according to media reports.

The Nikkei 225 Index tumbled 478.79 points, or 1.8 percent, to 25,970.82, its lowest close since November 20, 2020. The broader Topix closed 1.3 percent lower at 1,857.58, notching a fifth straight session of decline.

Heavyweights led losses, with Fast Retailing, Fanuc and SoftBank Group losing 4-7 percent. Daiichi Sankyo finished marginally higher after announcing its Enhertu cancer drug topped chemotherapy at prolonging patients’ lives.

Australian markets fell the most in nearly one-and-a-half years, as heightened geopolitical tensions coupled with fears about possible aggressive tightening by the Federal Reserve to combat inflation dented investors’ appetite for riskier assets.

The benchmark S&P/ASX 200 Index plunged 215.10 points, or 3 percent, to 6,990.60 – marking its worst session since September 4, 2020. The broader All Ordinaries Index lost 220.80 points, or 3 percent, to finish at 7,253.10. Selling was seen across the board, with banks, miners and technology stocks leading the losses.

Gold miners outperformed as bullion prices jumped to their highest in more than a year. Newcrest Mining surged 4 percent and Northern Star Resources soared 5.9 percent.

Seoul stocks lost ground as investor sentiment worsened over Russia’s launch of military operations in Ukraine. The Kospi dove 70.73 points, or 2.6 percent, to close at 2,648.80.

Market bellwether Samsung Electronics dropped over 2 percent, No. 2 chipmaker SK Hynix gave up 4.7 percent, top carmaker Hyundai Motor declined 4.2 percent and leading chemical firm LG Chem plunged 6.8 percent.

Earlier in the day, the Bank of Korea maintained its base rate at 1.25 percent, citing fallouts from the pandemic and the Ukraine crisis.

Europe

European stocks have joined the global sell-off on Thursday, as Russian President Vladimir Putin announced a war on Ukraine and U.S. President Joe Biden said the U.S. will coordinate with NATO allies to ensure a strong, united response.

While the German DAX Index has plummeted by 5.3 percent, the French CAC 40 Index is down by 4.3 percent and the U.K.’s FTSE 100 Index is down by 3.2 percent.

Banks have led the losses, with Commerzbank, Deutsche Bank, BNP Paribas, Credit Agricole and Societe Generale posting steep losses.

Aerospace company Rolls Royce has also plunged in London on news its chief executive officer Warren East will step down at the end of this year.

Lloyds Banking Group has also moved sharply lower after its pretax profit for the fourth quarter of 2021 came in below market expectations.

BP Plc lost 5.4 percent and TotalEnergies fell 4 percent despite Brent prices breaching $100 a barrel for the first time since 2014 after Russia’s attacks across Ukraine.

France’s Accor has also shown a significant move to the downside despite the hotel group returning to a profit for 2021.

Conglomerate Bouygues has also declined. After posting encouraging annual earnings, the construction, telecoms and media group said it expects to grow its sales and core profit further in 2022.

Aircraft engine manufacturer Safran and insurer Axa have also come under pressure despite posting solid full-year results.

German telecommunications giant Deutsche Telekom has also moved sharply lower after reporting a decrease in fourth quarter profits.

On the other hand, miner Anglo American has shown a strong move to the upside after it delivered record profit and cash returns.

Aixtron, a chip equipment manufacturer, has also moved notably higher after its revenue for the full year 2021 increased 59 percent.

U.S. Economic Reports

A report released by the Labor Department on Thursday showed first-time claims for U.S. unemployment benefits fell by slightly more than expected in the week ended February 19th.

The Labor Department said initial jobless claims dropped to 232,000, a decrease of 17,000 from the previous week’s revised level 249,000.

Economists had expected jobless claims to dip to 235,000 from the 248,000 originally reported for the previous week.

The report showed the less volatile four-week moving average also edged down to 236,250, a decrease of 7,250 from the previous week’s revised average of 243,500.

The Commerce Department released a separate report showing the U.S. economy grew by slightly more than originally estimated in the fourth quarter of 2021.

The report showed the increase in real gross domestic product in the fourth quarter was upwardly revised to 7.0 percent from the previously reported 6.9 percent. The upward revision matched economist estimates.

The stronger than previously estimated growth primarily reflected upward revisions to non-residential fixed investment, state and local government spending, and residential fixed investment.

The Commerce Department noted the upward revisions were partly offset by downward revisions to consumer spending and exports.

At 9 am ET, Richmond Federal Reserve President Thomas Barkin is due to participate in a panel on the economy and Maryland’s recovery before a virtual State of the State event hosted by the Maryland Chamber of Commerce.

The Commerce Department is scheduled to release its report on new home sales in the month of January at 10 am ET. New home sales are expected to drop by 0.6 percent to an annual rate of 806,000 in January after spiking by 11.9 percent to a rate of 811,000 in December.

At 11 am ET, the Energy Information Administration is due to release its report on oil inventories in the week ended February 18th.

Crude oil inventories are expected to edge down by 0.8 million barrels after rising by 1.1 million barrels in the previous week.

Atlanta Federal Reserve President Raphael Bostic is slated to speak on Banking on Success in a Digital Era and participate in a moderated conversation before a virtual Federal Reserve Bank of Atlanta Banking Outlook Conference at 11:10 am ET.

At 12 pm ET, Cleveland Federal Reserve President Loretta Mester is due to speak on the economic outlook and monetary before a virtual 2022 Economic Forecast event hosted by the Lerner College Center for Economic Education and Entrepreneurship and The Lyons Companies.

Richmond Fed President Barkin is also scheduled to speak on the economic outlook before Virginia’s Gateway Region at 12 pm ET.

At 1 pm ET, the Treasury Department is due to announce the results of the this month’s auction of of $50 billion worth of seven-year notes.

Federal Reserve Governor Christopher Waller is scheduled to speak on the economic outlook before the University of California, Santa Barbara Economic Forecast Project Economic Update at 8 pm ET.

Stocks In Focus

Shares of Wayfair (W) are moving sharply lower in pre-market trading after the home furnishings retailer reported a wider than expected fourth quarter loss amid a steep drop in international sales.

USA Today publisher Gannett (GCI) is also likely to come under pressure after reporting a fourth quarter loss that exceeded analyst estimates on weaker than expected revenues.

Shares of eBay (EBAY) are also seeing significant pre-market weakness after the e-commerce giant reported better than expected fourth quarter results but provided disappointing guidance.