Closed down nearly 3% by the S&P 500-stock Index, while the Dow dropped almost 2.4% (or almost 800 points) to 32,817. The Nasdaq composite fell 3.6%. Stocks are facing their worst day since Russia invaded Ukraine.
As the conflict in Ukraine escalates, U.S. sanctions on Russia will be tougher. California Democratic Congressman Adam Schiff said Sunday on CBS News that he believes there is strong bipartisan support for a U.S. ban against Russian oil imports.
U.S. companies, ranging from banks and oil companies to internet service providers, are blocking Russia’s access after its invasion Ukraine. The list of other companies doing so grows daily.
“History suggests large disruptions in oil supply, which would likely represent a ban on Russian oil imports from Russia, could be heavy on the U.S. stock exchange,” Thomas Mathews (markets economist at Capital Economics) said in a research paper.
A limited ceasefire
Russian forces continued to bombard some cities in Ukraine with rockets, even though Moscow had announced a ceasefire. It also proposed a few land corridors for civilians fleeing Ukraine beginning Monday.
Over the weekend, a similar temporary ceasefire was broken in two cities in Ukraine. Both sides were blamed.
Nancy Pelosi, Speaker of the U.S House of Representatives, stated that the House was looking into legislation to further isolate Russia. This includes banning imports of oil and other energy products into the U.S.
Oil prices were put under further pressure after Libya’s national petroleum company reported that an armed group had closed down two oil fields. This caused the country to lose 330,000 barrels of oil per day.
Reports suggest that U.S. officials might be looking at easing sanctions on Venezuela. This could allow for more crude oil to be available and reduce concerns about Russia’s reduced supply.
U.S. crude oil rose $5.21 to $120.89 a bar in electronic trading on New York Mercantile Exchange. The global benchmark was at $130. Brent crude, which is the international standard for pricing, reached $139.13 per barrel before it fell back Monday. Bloomberg reports that the record oil price was $139.13 per barrel in July 2008.
According to AAA motor club, the spike in oil prices in the world has driven the average gasoline price in the United States above $4 per g for the first time since 2008.
Recent market swings have been triggered by concerns about the impact Russia’s invasion will have on oil, wheat, and other commodities. This has exacerbated the already high inflation in the world. The conflict in Ukraine is also threatening the food supply to some regions, including Europe and Africa, Asia, and Africa, which depend on the rich, fertile farmlands in the Black Sea region, commonly known as the “breadbasket” of the world.
Yeap Jun Rong (market strategist at IG Singapore) stated that the Ukraine-Russia conflict will continue dominating market sentiments. No signs of conflict resolution so far may likely put a limit on risk sentiments in the new week.
“It should now be obvious that economic sanctions won’t deter any Russian aggression, but will serve more to punish the Russians than it will impact global economic growth. Yeap stated that rising oil prices could pose a threat for firms’ margins as well as consumer spending prospects.