Dow futures, Asian stocks sink while oil soars after US and allies consider banning Russian oil

In Asia, Hong Kong’s Hang Seng Index (HSI) sank as much as 5% in morning trading. It was last down 3.4%, on track to log its worst daily drop in seven months. Japan’s Nikkei 225 (N225) tumbled 3.6%. South Korea’s Kospi (KOSPI) dropped 2.5%. China’s Shanghai Composite (SHCOMP) lost 1%.
On the US market, Dow futures fell 450 points, or 1.3%. S&P 500 and Nasdaq futures were down 1.6% and 2% respectively.

The latest turmoil came as US crude futures surged more than 7% to trade at $124.17 a barrel, the highest level since August 2008. Brent crude also rose to the highest level since 2008, up 8% to $127.66 a barrel.

Oil prices soared further after US Secretary of State Antony Blinken said Sunday in an interview with CNN that the United States is working with its allies in Europe to look into the possibility of banning Russian oil imports in an effort to further punish the country.

“In the event of any implementation [of the ban], the move will further exacerbate the supply-demand imbalance in an already tight oil market,” wrote Yeap Jun Rong, a market strategist for IG Group.

“Elevated oil prices may pose a threat to firms’ margins and consumer spending outlook, at a time where the Fed will face greater pressure of having to overcorrect with quicker and larger rate hikes in light of inflationary pressures,” he added.

Delays to the conclusion of Iranian nuclear talks added to investor concerns about supply disruptions, Yeap said.

Dow futures, Asian markets plunge as Russia-Ukraine crisis escalates

Hong Kong’s Hang Seng Index (HSI) declined 3.2%. Korea’s Kospi dropped 2.7%. Japan’s Nikkei 225 (N225) lost 2.4% after coming back from a holiday. China’s Shanghai Composite moved 0.9% lower.

US stocks futures also tumbled. Dow futures were down as much as 780 points, or 2.4%. S&P 500 and Nasdaq futures were down 2.3% and 2.8% respectively.

The Moscow Exchange announced Thursday it had suspended trading on all of its markets until further notice.

The Russian ruble plummeted nearly 10% against the US dollar, trading at 89.59 per dollar.

The market turbulence comes as CNN teams in Ukraine reported explosions. Putin announced a military operation in the Donbas region of eastern Ukraine early Thursday local time.

In the address, broadcast on Russian national television, Putin urged Ukrainian forces to lay down their arms and go home, saying all responsibility for possible bloodshed will be entirely on the conscience of the Ukrainian government.

Putin’s speech came as concerns mounted of an imminent full-scale Russian invasion. Ukrainian President Volodymyr Zelensky said in an emotional speech early Thursday that the Russian leadership had approved military action in Ukraine and vowed the country would defend itself.

“Geopolitical risks remain at the forefront, weighing on risk assets as heightened uncertainty over Ukraine continue to keep market participants on edge,” wrote Yeap Jun Rong, a market strategist for IG Group, in a note on Thursday.

He added that Putin is probably “willing to weather the economic impact of sanctions, which may bring into question on what the Western powers can do to hold off an invasion.”

Brent crude, the world benchmark, climbed above $100 a barrel for the first time since 2014. US crude jumped 4.8% to $96.55 a barrel.

Chinese tech stocks ignore state media call

Meanwhile, Chinese tech shares fell on Thursday despite state media seeking to reassure investors over regulation concerns.

On Friday, Chinese authorities released a set of new rules to help the services sector recover from the pandemic, and directed online delivery platforms to cut service fees or commissions they charge businesses.

The announcement sparked fears about a renewed tech crackdown and hammered tech shares this week. Online food delivery platform Meituan has plunged more than 20% since Friday.

The state-run Economic Daily tried to play down the fears on Wednesday.

The market has “over-reacted” to the government’s guidance that food delivery platforms should cut service fees they charge businesses, the state-run Economic Daily said in an editorial, adding that the policy’s aim is to not target the internet economy but to support the service sector in the post-pandemic recovery process.

“The guidance has more than 5,000 words, with only a few lines concerning the platform economy,” the paper said.
But tech investors are still nervous. Meituan was down 2.4%. Tencent, which has a major stake in Meituan, tumbled 3%. Alibaba, which owns food-delivery platform, sank more than 6%.

Alibaba is scheduled to reveal its quarterly earnings later Thursday.

CNN Business’ Matt Egan contributed to the report.