World stocks slid, oil prices jumped and the rouble tanked to fresh record lows on Monday, as the west ramped up sanctions against Russia for its attack on Ukraine, including blocking banks from the SWIFT global payments system.
Subscribe now for unlimited access.
or signup to continue reading
Russia's central bank raised its key interest rate to 20 per cent from 9.5 per cent in an emergency move, and authorities told export-focused companies to be ready to sell foreign currency as the rouble slid almost 30 per cent to record lows versus the dollar.
As an economic crisis loomed in Russia, the fallout of tougher sanctions from the West imposed over the weekend rippled out across financial markets.
European stocks slumped 2 per cent. European banks most exposed to Russia, including Austria's Raiffeisen Bank , UniCredit and Societe Generale, dropped between 9 and 15 per cent, while the wider euro zone banking index fell 7 per cent.
US stock futures were deep in negative territory , although MSCI's broad gauge of Asia shares and Japan's Nikkei eked out small gains.
"The trading environment is highly dynamic, and we maintain a defensive stance as things could get a lot worse from here," said Peter Garnry, head of equity strategy at Saxo Bank.
Oil prices meanwhile surged after Russian President Vladimir Putin put nuclear-armed forces on high alert on Sunday, the fourth day of the biggest assault on a European state since World War Two.
The ramp-up in tensions heightened fears that oil supplies from the world's second-largest producer could be disrupted, sending Brent crude futures up 5 per cent to $102.86. US West Texas Intermediate crude futures were up $4.62 or almost 5.0 per cent at $96.24 a barrel.
"I am telling clients all we know for certain is that energy prices are going to be higher, and there are going to be some beneficiaries," said John Milroy, Ord Minnett financial adviser in Sydney.
"It's an old cliche, but it's true that uncertainty drives moves in both directions."
As uncertainty continued to grip markets, investors plumped for the safety of the dollar, Swiss franc and Japanese yen.
The euro slid 1 per cent to $1.1168 and 0.9 per cent to 129.08 yen , while the risk-sensitive Australian and New Zealand dollars fell 0.5 per cent and 0.3 per cent, respectively.
Sovereign bonds such as the US Treasuries and German Bunds -- regarded as among the most safest assets to hold globally -- remained in strong demand.
The 10-year US Treasury yield was down around 7 basis points to 1.90 per cent in London trade, and equivalent German yields were down 6 basis points to 0.16 per cent.
Money markets continued to push back rate hike expectations with investors now pricing roughly 30 basis points worth of tightening from the European Central Bank in total this year, down from 35 bps late last week.
Gold was last up 0.61 per cent to around $1,899.
Russia's rouble dived almost 30 per cent to a record-low 120 per dollar, but recovered some ground to last trade at just over 100 to the dollar.
MSCI's Russia equity index slid 25 per cent, while London and Frankfurt-listed Russian equity exchange traded funds (ETFs) tanked more than 35 per cent as investors dumped Russian assets.
Australian Associated Press
