European markets opened lower, as the West continued to impose fresh sanctions on Russia. In early trade the United Kingdom’s FTSE 100 fell 1%, the German DAX 30 dropped 2% and France’s CAC 40 was 2% lower.
Asian markets ended the day on a mixed note. Hong Kong’s Hang Seng lost as much as 1.6%, before closing down 0.2%. Japan’s Nikkei 225 and Korea’s Kospi erased earlier losses and were up 0.2% and 0.8%, respectively. China’s Shanghai Composite was up 0.3%.
On Wall Street, Dow futures were down 490 points, or 1.4% at 3:40 a.m. ET. S&P 500 futures fell 1.9% and Nasdaq futures were 1.7% lower.
Global markets had been turbulent last week after Russian President Vladimir Putin launched an invasion of Ukraine, and the pain has spread beyond stocks.
The Russian ruble plummeted as much as 40% Monday against the US dollar, after Western countries announced new sanctions against Russia, including expelling certain Russian banks from SWIFT, the high-security network that connects thousands of financial institutions around the world.
The Russian ruble was last down 30%, trading at 108.7.
“This weekend’s events now mean that no G7 banks will be able to buy Russian rubles, sending the currency into freefall,” wrote Michael Hewson, chief market analyst at CMC Markets in London, in a research report on Monday, warning that “a huge inflationary shock” could unfold inside Russia.
The Russian Central Bank on Monday announced it would hike its key interest rate from 9.5% to 20%, noting that “external conditions for the Russian economy have drastically changed.”
The rate increase is “needed to support financial and price stability and protect the savings of citizens from depreciation,” the central bank added.
On the commodities market, the potential disruption of oil exports from Russia is causing concern. Brent crude, the international benchmark, rose 4.8% to $102.7 a barrel. US crude rose 5.7% to $96.8 a barrel.
Hewson said oil prices have surged further over concerns that companies won’t be able to pay for Russian oil and gas, “which could well prompt Putin to shut off the supply.”
The conflict also threatens to exacerbate food inflation. Russia is the world’s top exporter of wheat, and Ukraine is also a significant exporter of both wheat and corn. Wheat futures soared about 7% on the Chicago Board of Trade.
“What is clear is that commodity prices will continue to rise and this supply shock should be a negative for activity and equities,” said analysts from ING in a research report on Monday.
Russia continued to bear down on Ukraine’s largest cities over the weekend despite stiff resistance. Ukraine-Russia talks are set to take place between delegates of the two nations Monday on the Ukrainian-Belarusian border.
Still, President Vladimir Putin ordered his country’s deterrence forces — including nuclear arms — be placed on high alert.
Putin’s threat came after the United States, the European Union, the United Kingdom and Canada announced the expulsion of certain Russian banks from the SWIFT banking system Saturday. Removing some Russian banks from SWIFT could effectively disconnect them from the international financial system, hindering their ability to do global business.
But that action could hurt European countries’ ability to buy Russian energy. Senior Russian lawmakers have said that shipments of oil, gas and metals to Europe would stop if the country’s financial system is removed from SWIFT.
Some Western banks also have assets tied up in Russia, and cutting Russian banks off from SWIFT could sting.
– CNN Business’ Matt Egan, Vasco Cotovio and Darya Tarasova contributed to this report