SYDNEY – Shares sank in frantic trading on Monday as the risk of a US and European ban on Russian product and delays in Iranian talks triggered what was shaping up as a major stagflationary shock for world markets.
The euro extended its slide, hitting parity against the safe-haven Swiss franc, and commodities of all stripes were on the rise as the Russian-Ukraine conflict showed no sign of cooling.
Russia calls the campaign it launched on Feb. 24 a “special military operation”, saying it has no plans to occupy Ukraine.
Having surged 18 percent in wild early action, Brent was last quoted $9.95 higher at $128.06, while US crude rose $8.35 to $124.03.
That jump will act as a tax on consumers and the potential blow to global economic growth saw S&P 500 stock futures drop 1.3 percent, while Nasdaq futures shed 1.7 percent. US 10-year bond yields also dropped to their lowest since early January.
EUROSTOXX 50 futures dived 3.0 percent and FTSE futures 2.7 percent.
Japan’s Nikkei sank 3.4 percent to a 15-month low, while MSCI’s broadest index of Asia-Pacific shares outside Japan lost 2.4 percent. Chinese blue chips shed 2.3 percent amid a sea of red across Asian markets.
Having climbed 21 percent last week, Brent crude was further energized by the risk of a ban of Russian oil by the United States and Europe.
“If the West cuts off most of Russia’s energy exports it would be a major shock to global markets,” said BofA chief economist Ethan Harris.
He estimates the loss of Russia’s 5 million barrels could see oil prices double to $200 a barrel and lower economic growth globally.
