(Bloomberg) — European stocks dropped with U.S. equity futures as a standoff over Ukraine hardened and hopes faltered for a summit between President Joe Biden and his Russian counterpart Vladimir Putin.
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The Stoxx Europe 600 index fell to its lowest level in four weeks after the Kremlin said there are “no concrete plans” yet for a meeting between the Russian and U.S leaders. The decline in Nasdaq 100 futures outpaced that of S&P 500 contracts.
Markets are being whipsawed by Russia’s troop buildup near Ukraine and efforts at diplomacy to bring both sides back from the brink of war. France said its proposal for a summit was accepted in principle by Biden and Putin. U.S. officials said the meeting would only occur if Russia doesn’t invade Ukraine, while Russia has said repeatedly it has no plans to do so.
Russian stocks fell the most since March 2020 and the ruble tumbled for a third day. Gazprom PJSC and Sberbank PJSC were among the biggest drags on the MOEX Russia Index, falling more than 8% each. U.S. Treasury futures rose, suggesting renewed haven demand. Cash bonds won’t trade because of a U.S. holiday.
Russian forces killed five “saboteurs” and destroyed two Ukrainian armored personnel carriers that crossed into Russian territory in the first alleged incident over the international border, state-run Tass news service reported. U.S. Secretary of State Antony Blinken and Russian Foreign Minister Sergei Lavrov are due to meet this week.
The Ukraine standoff, along with the worry that tightening Federal Reserve monetary policy could choke growth in the world’s biggest economy, raise the likelihood of more swings in markets in an already volatile year.
“Global data and central banks’ stance on tightening are all taking a back seat to Ukraine, with markets nervously awaiting the next headline,” said Su-Lin Ong, head of Australian economic and fixed-income strategy at Royal Bank of Canada. “Thinner liquidity because of the U.S. holiday adds to the anxiety.”
Bets on a supersized Fed rate hike of 50 basis points in March have diminished amid the standoff over Ukraine.
The Fed’s key inflation metric may have accelerated to a fresh four-decade high in January, data this week is expected to show.
Here are some events to watch this week:
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Russia’s Foreign Minister Sergei Lavrov has agreed to meet U.S. Secretary of State Antony Blinken this week in Europe
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Fed Governor Michelle Bowman speaks Monday
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China property prices, loan prime rates Monday
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New Zealand rate decision Wednesday
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BOE Governor Andrew Bailey appears before the Treasury Committee Wednesday
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Bank of Korea policy decision Thursday
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EIA crude oil inventory report Thursday
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Fed officials Loretta Mester and Raphael Bostic speak Thursday
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U.S. new home sales, GDP, initial jobless claims Thursday
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U.S. consumer income, U.S. durable goods, PCE deflator, University of Michigan consumer sentiment Friday
Some of the main moves in markets:
Stocks
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The Stoxx Europe 600 fell 1.3% as of 2:15 p.m. London time
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Futures on the Nasdaq 100 fell 1.1%
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Futures on the Dow Jones Industrial Average fell 0.4%
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The MSCI Asia Pacific Index fell 0.5%
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The MSCI Emerging Markets Index fell 1%
Currencies
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The Bloomberg Dollar Spot Index fell 0.2%
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The euro rose 0.1% to $1.1338
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The Japanese yen rose 0.1% to 114.88 per dollar
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The offshore yuan was little changed at 6.3260 per dollar
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The British pound rose 0.2% to $1.3611
Bonds
Commodities
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Brent crude rose 0.9% to $94.38 a barrel
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Spot gold fell 0.2% to $1,894.12 an ounce
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