Oil prices surged and stocks fell after Russia’s president Vladimir Putin ordered troops into Ukraine, putting his country on a war footing and forestalling attempts at a diplomatic solution to the crisis.
Brent crude, the international oil benchmark, jumped as much as 2.4 per cent to $97.66 a barrel, a fresh seven-year high, while West Texas Intermediate, the US marker, rose as much as 4.5 per cent to $95.19.
In equities markets, Hong Kong’s benchmark Hang Seng index shed 2.2 per cent, while Japan’s Topix and China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks both dropped 1.7 per cent.
“In the short term, we’re simply going to be trading the headlines,” said Robert Rennie, global head of market strategy at Sydney-based Westpac. “Obviously the headlines have taken a very ominous turn in the last few hours.”
Futures indicated a tumble for Wall Street as US markets returned from a national holiday, with the S&P 500 set to drop 1.7 per cent and the tech-focused Nasdaq expected to fall 2.3 per cent.
In sovereign debt markets, bond yields fell as investors sought safety from falling share prices, with yield on the 10-year US Treasury down 0.07 percentage points at 1.862 per cent.
The moves in global markets also came after Moscow claimed it had destroyed Ukrainian military vehicles that entered Russian territory and Putin agreed to recognise two Moscow-backed separatist regions in eastern Ukraine.
US secretary of state Antony Blinken said Putin’s decision to recognise the Russian-backed Donetsk and Luhansk people’s republics as independent was a “clear attack” on Ukraine’s sovereignty. A senior US official warned on Monday that an invasion of Ukraine could be launched as early as in the “coming hours”.
The UK is expected to announce sanctions against Russia on Tuesday. Foreign secretary Liz Truss said the measures would be imposed in response to Moscow’s “breach of international law and attack on Ukraine’s sovereignty and territorial integrity”.
The crisis in Ukraine has stoked volatility in global markets in recent weeks, driving up energy prices on concerns that supply chains could face severe disruption in the event of a conflict. Analysts at JPMorgan have estimated oil could hit $120 a barrel in the coming weeks if the crisis in Ukraine worsened.
The conflict has also sent Russian stocks plummeting. The country’s benchmark Moex index dropped 10.5 per cent on Monday, the biggest one-day fall since Russia seized Crimea in 2014.