DJIA fell 1.04%, S&P 500 lost 1.15%, Nasdaq Composite dropped 1.47%, STOXX 600 shed 0.60%, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 2.89% and Nikkei lost 2.94%
Oil and other commodities prices soared while global shares sank on Monday as the risk of a U.S. and European ban on Russian crude imports threatened supply chains and heaped further inflationary pressure on economies worldwide.
Brent, the international benchmark, briefly hit more than $139 a barrel, its highest level since 2008.
Nickel soared 30%, gold broke through $2,000 an ounce and wheat jumped to a 14-year high, as industrial buyers and traders scrambled to source raw materials hit by supply disruptions caused by the Russian invasion of Ukraine.
Euro zone government bond yields fell sharply due to surging energy prices, even before talks of a Russian oil ban, raised concerns that global economies are at risk of stagflation, where prices soar even as growth flatlines.
Germany’s 10-year and 30-year inflation-linked government bond yields fell as much as about 16 basis points (bps), hitting new record lows of -2.531% and -2.407%.
U.S. Secretary of State Antony Blinken said on Sunday the United States and European allies were exploring banning imports of Russian oil, while the White House was coordinating with Congressional committees to move forward with a U.S. ban.
That news pressured U.S. and European stock markets, and sent the MSCI’s gauge of stocks across the globe down 1.45%.
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.
The Dow Jones Industrial Average fell 349.45 points, or 1.04%, the S&P 500 lost 49.72 points, or 1.15% and the Nasdaq Composite dropped 195.51 points, or 1.47%.
The pan-European STOXX 600 index was last down 0.60%, having bounced back from touching a one-year low earlier in the trading session.
Germany’s DAX looked set to confirm a bear market after suffering a 20% decline since its January high.
Emerging market stocks lost 3.00%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 2.89% lower, while Japan’s Nikkei lost 2.94%.
Brent was last at $122.78, up 3.95% on the day. U.S. crude recently rose 2.59% to $118.68 per barrel.