Here’s a roundup of how markets are dealing with the news so far:
Stocks: Warren Buffett isn’t running scared, but U.S. stocks are getting hammered, with the Dow industrials down more than 200 points. European stocks fell sharply. Russian stocks, unsurprisingly, have taken a sharp hit, with Russia’s MICEX index dropping more than 11%. That spells trouble for the Market Vectors Russia ETF Trust which is down 7.5%, bringing its year-to-date loss to nearly 22%.
Russia-exposed shares and ADRs were also vulnerable, with Russian Internet search engine firm Yandex N.V. dropping 14%, while ADRs for Dutch telecom firm VimpelCom lost 7.6%. According to The Wall Street Journal, analysts at Citigroup said Russian-listed companies most exposed to Ukraine include Gazprom, Mobile Telesystems, VimpelCom, VTB Bank, Sberbank and Evraz.
Among Russia-exposed firms trading in Europe, Germany’s Metro AG and Danish brewer Carlsberg each dropped more than 5%; Finnish tire-maker Nokian Renkaat fell 6.6%.
European banks are also faring poorly, with Austrian lenders in focus due to high exposure to Ukraine. Raiffeisen Bank International fell nearly 10% in Vienna, while Erste Bank dropped 4.7%.
Oil: Russia is one of the world’s largest oil producers and exporters. Brent crude led the way higher for the oil complex, with the April contract on ICE jumping 2.1% to $111.35 a barrel. Nymex WTI crude followed, up $1.73, or 1.7%, to $104.32 a barrel in recent action. Surging oil prices could amplify worries about global growth.
“Although we haven’t seen any actual disruptions to Russian crude supply yet, prices are rallying on fears over potential economic sanctions against the country in the event of a full-scale invasion of Ukraine. What’s more, Russia is a major gas supplier to Europe and their pipelines go through Ukraine. The prospect of a decrease in gas supplies is thus further boosting prices across the energy sector as a whole,” said Fawad Razaqzada, analyst at Forex.com.
Gold: Gold, a traditional safe haven in times of political crisis, couldn’t find much support last week as traders shrugged off growing tensions in Ukraine. That changed Monday, with the yellow metal surging more than 2% to hit a four-month high above $1,351 an ounce. Gold is up more than 12% since the beginning of the year after getting hammered in 2013.
The SPDR Gold Trust ETF rose 2.1%. Miners are on the rise, with Newmont up 1.7, while Randgold Resources jumped more than 4% in London.
U.S. Treasurys: The debate over the Fed’s tapering path has been forgotten for now. Investors are snapping up Treasurys, sending the yield on the benchmark 10-year note tumbling more than 4 basis points to around 2.61%.
Wheat: The turmoil in Ukraine will bring back memories of the Soviet days to long-in-the-tooth grain traders who once were used to big market swings courtesy of Moscow. Both Russia and Ukraine are among the world’s largest growers and exporters of wheat, and the prospect for disruptions is providing a big boost amid tightening U.S. and Canadian stocks of the grain.
New-crop July wheat futures at the Chicago Board of Trade were up 28 cents at $6.3025 in recent trade. On a nearby basis, wheat futures have risen more than 5% since the end of 2013.
Emerging markets: While analysts debate whether the crisis will remain largely isolated to Ukraine and Russia, emerging markets are seeing near-term pressure. The iShares MSCI Emerging Markets ETF is down 2%, making for a 7.4% loss since the beginning of the year.
Currencies: The Russian ruble and the Ukrainian hryvnia are plummeting. Russia’s central bank on Monday moved to “temporarily” hike interest rates, taking its benchmark to 7% from 5.5%.
The dollar is catching something of a bid, with the ICE dollar index a measure of the greenback against a basket of major rivals, up 0.3%. The yen, which is usually the primary beneficiary of haven-related flows, has retreated from early gains. The dollar is up slightly versus the Japanese unit at 101.45 yen.
Volatility: The Chicago Board Options Exchange volatility index known as Wall Street’s “fear gauge,” soared 2.65 points, or more than 19%, to 16.65. That’s a big jump, but the index remains relatively low by historical standards.