Stock futures declined, while oil prices rose sharply, as investors monitored developments around Russia’s invasion of Ukraine, and the potential for central banks to raise interest rates despite economic uncertainty.
Futures for the S&P 500 declined 0.9% Thursday, while contracts for the tech-focused Nasdaq-100 fell 1.1% and futures for the Dow Jones Industrial Average were 1% lower. All three indexes broke a four-session losing streak Wednesday, when oil prices declined from recent highs but remained above $100 a barrel.
White House press secretary Jen Psaki lashed out at Russian claims that the US was developing chemical weapons in Ukraine late Wednesday, warning it could be a pretext for Moscow to use such weapons itself. Some analysts said concerns over this may have added to market nervousness Thursday.
On Thursday, futures for Brent crude, the global oil benchmark, rose 5.8% to $117.62 a barrel. The US equivalent, West Texas Intermediate, added 5.1% to $114.28.
In premarket trading, Amazon.com shares rose more than 4% after the e-commerce giant’s board approved a 20-for-1 stock split and authorized the repurchase of up to $10 billion of common stock.
Overseas, the pan-continental Stoxx Europe 600 fell 1.7%, after notching Wednesday its largest daily percentage gain since March 2020. The index’s banking sector fell 1.6% Thursday, as investors worry about the European economy’s exposure to Russia.
“Yesterday, there was this rally and already you can see profit-taking. There’s very little conviction in this market,” said Agnès Belaisch, chief European strategist at the Barings Investment Institute.
The European Central Bank kept its key policy rate unchanged but indicated that it may end its asset-purchase program in the third quarter, sooner than expected. Investors expect that an end to that program could open the door to an interest-rate increase. The euro rose 0.2% against the dollar after the announcement, before trading flat.
If concerns over inflation trump fears of economic weakness, the central bank is more likely to raise interest rates, said Samy Chaar, chief economist at Lombard Odier.
“Looking at the statement, it seems relatively clear that inflation risk dominates,” he said.
Eurozone bond yields jumped after the announcement. German 10-year bund yields rose to 0.284%, from 0.206% Wednesday. Italian 10-year bond yields climbed to 1.902% from 1.677% Wednesday. Yields and prices move inversely.
In the US, the yield on the benchmark 10-year Treasury rose to 1.981% from 1.946% Wednesday.
Russia’s invasion of Ukraine has injected volatility into stocks, bonds, commodities and currencies, as investors try to assess the impact of sanctions and the potential for disruptions to trade and supply chains.
The Russian ruble traded at almost 118 rubles to the dollar in offshore trading Thursday, having strengthened against the greenback from Wednesday, according to FactSet.
Assessing the ruble’s value has grown difficult over the last two weeks, as it has become harder for banks to execute orders, following Western sanctions and capital controls imposed by Russia. Russia’s stock market has remained closed since Feb. 25.
High oil prices have prompted concerns that the US and Europe could suffer a combination of sustained inflation and lower economic growth, as elevated energy prices eat away at household spending. US inflation reached a new four-decade high in February, with the consumer-price index up 7.9% from a year earlier.
Bitcoin’s dollar value dropped more than 6% Thursday from its 5 pm ET level Wednesday to $39,062.31. The world’s largest cryptocurrency by market value rallied Wednesday as President Biden announced an executive order to study digital currencies, a move the industry welcomed and skeptics decried as delaying necessary regulation. Bitcoin’s dollar value tends to track broader stock markets, baring industry-specific news, analysts say.
Major benchmark stock indexes in Asia tracked Wall Street’s gains from Wednesday. China’s Shanghai Composite rose 1.2% Thursday, South Korea’s Kospi jumped 2.2% and Japan’s Nikkei 225 surged 3.9%.
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