On Tuesday, after Russian President Vladimir Putin ordered soldiers into eastern Ukraine, US markets plummeted, with the S&P 500 index entering a downturn, and oil prices hit $100 a barrel. Brent, the international crude oil benchmark, climbed to $99.50 a barrel, its highest level since 2014, as traders evaluated the risk of Russian supply disruptions. It later gave back some of its gains, settling at $96.84 per barrel, up 3.5 percent from the previous day.
The actions occurred after Putin ordered his military to enter rebel-held Donetsk and Luhansk regions of Ukraine, forcing Germany to postpone licencing of the Nord Stream 2 natural gas pipeline and western governments to declare further sanctions against Moscow. Energy and consumer discretionary companies dragged Wall Street’s benchmark S&P 500 index lower by 1% to its lowest closing level since late 2021.
The drop on Tuesday pushed the index into a correction, or a 10% drop from its January high. The Nasdaq Composite Index, which is heavily weighted in technology, sank 1.2 percent. The Stoxx Europe 600 index fell as much as 1.9 percent before bouncing back to finish 0.1 percent higher. The Vix barometer of expected volatility on the S&P 500 was trading at 28.9. Volatility indexes showed traders expected stock markets to continue to fluctuate on reports surrounding Ukraine, with the Vix gauge of expected volatility on the S&P 500 trading at 28.9.
Natural gas contracts in Europe increased by almost a tenth to €79.50 per megawatt hour, ahead of the US and its allies imposing penalties on Moscow later in the day. Purchases of Russian government bonds issued after March 1 will be prohibited under sanctions. The announcement had minimal impact on Russian sovereign bonds denominated in euros, which had already sold off earlier in the day.