Dow tumbles as Russia threatens the West

By CNN Business

Updated 8:16 a.m. ET, March 1, 2022
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8:07 a.m. ET, February 28, 2022

Defense stocks set to pop on continued Russia worries

From CNN Business' Paul R. La Monica

Stocks are set to fall at the opening bell Monday as investors grapple with what the latest headlines about Russia and Ukraine mean for the global economy. But defense stocks look ready to rally.

Worries about Russian president Vladimir Putin's decision over the weekend to put deterrence forces, which include Russia's stockpile of nuclear weapons, on high alert have investors betting on nations around the world ramping up military spending. Germany announced plans over the weekend to allocate 100 billion euros to a special fund for more defense spending.

Shares of defense contractors Northrop Grumman (NOC), Raytheon (RTX), General Dynamics (GD) and Lockheed Martin (LMT) were all up between 3% and 6% in premarket trading Monday. That will likely make them among the best market performers.

These and other defense stocks and defense sector exchange-traded funds surged Thursday following Russia's invasion of Ukraine and they rallied again Friday.

7:33 a.m. ET, February 28, 2022

Russia faces financial meltdown as sanctions slam its economy

From CNN Business' Mark Thompson

A branch of Citibank in Moscow on February 24.
A branch of Citibank in Moscow on February 24. (Andrey Rudakov/Bloomberg/Getty Images)

President Vladimir Putin was due to a hold crisis talks with his top economic advisers after the ruble crashed to a record low against the US dollar, the central bank more than doubled interest rates, and the Moscow stock exchange was shuttered for the day.

The European subsidiary of Russia's biggest bank was on the brink of collapse as savers rushed to withdraw their deposits. And economists warned that the Russian economy could shrink by 5%.

The collapse in the currency prompted the Russian central back to implement emergency measures on Monday, including a huge hike in interest rates to 20% from 9.5%.

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6:44 a.m. ET, February 28, 2022

Global stocks fall and oil surges as West pours on Russian sanctions

From CNN Business' Laura He

The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, on February 28. 
The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, on February 28.  Reuters

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%.

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.

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6:24 a.m. ET, February 28, 2022

Russia shutters its stock market as the ruble crashes

From CNN Business' Mark Thompson

Russia's currency crashed to a record low against the US dollar Monday as the country's financial system reeled from crushing sanctions imposed by Western countries in response to the invasion of Ukraine.

The ruble lost more than 30% of its value to trade at 109 to the dollar at 2.30 a.m. ET after earlier plummeting as much as 40%. The start of trading on the Russian stock market was delayedand then canceled entirely, according to a statement from the country's central bank.

The latest barrage of sanctions came Saturday, when the United States, the European Union, the United Kingdom and Canada said they would expel some Russian banks from SWIFT, a global financial messaging service, and "paralyze" the assets of Russia's central bank.

President Vladimir Putin's government has spent the last eight years preparing Russia for tough sanctions by building up a war chest of $630 billion in foreign currency reserves, but his "fortress" economy is now under unprecedented assault and at least some of that financial firepower is now frozen.

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6:21 a.m. ET, February 28, 2022

Dow futures tumble

From CNN Business' David Goldman

Russia continued to bear down on Ukraine's largest cities over the weekend, but Russian fighters bore stiff resistance from Ukrainians. Peace 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. That unnerved investors, concerned that the war could spill over to other countries outside of Ukraine.

Putin's threat came after the White House and several EU nations announced the expulsion of certain Russian banks from the SWIFT banking system Saturday evening. 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. Russia remains a key exporter of oil and natural gas for much of Europe, and immediate alternatives that could blunt rising energy prices from a reduction of Russian exports aren't obvious.

Some Western banks also have assets tied up in Russia, and cutting Russian banks off from SWIFT could sting.

Dow futures were down 400 points or 1.1%. S&P 500 futures fell 1.3%. Nasdaq futures were 1.3% lower.

The disruption to oil in particular is concerning to investors. Oil prices surged. Brent crude, the international benchmark, rose 4% to $101.80 a barrel. US crude rose 4.8% to $96 a barrel.

8:57 p.m. ET, February 27, 2022

Sanctions will put Russia's 'fortress' economy to the test

From CNN Business' Charles Riley

Moscow has tried to wean its oil-dependent economy off the dollar, limited government spending and stockpiled foreign currencies.

Putin's economic planners have sought to boost domestic production of certain goods by blocking equivalent products from abroad. Moscow has meanwhile amassed a war chest of $630 billion in international reserves — a huge sum compared to most other countries.

David Lubin, a Citi economist and associate fellow at Chatham House, said "fortress economics" requires the creation of big foreign currency reserves that can be spent if sanctions bite.

"Russia has followed this pattern assiduously," he wrote recently.

Some of those reserves are already being deployed. The Russian central bank said Thursday it was intervening in the currency markets to prop up the ruble. And on Friday, it said it was increasing the supply of bills to ATMs to meet increased demand for cash. Russian state news agency TASS reported that several banks had seen increased withdrawals since the invasion of Ukraine, notably of foreign currency.

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8:52 p.m. ET, February 27, 2022

The invasion of Ukraine changed everything for Wall Street

From CNN Business' Julia Horowitz

Russian President Vladimir Putin's decision to invade Ukraine last week shattered the security order in Europe that has existed since the end of the Cold War. It's also compelled investors to consider whether they need to adjust to a world that's changed for good.

"I believe that Russia's invasion of Ukraine marks nothing less than a shift away from the largely US/Western-dominated world order that has prevailed since the fall of the Berlin Wall," Michael Strobaek, the global chief investment officer at Credit Suisse, said in a note to clients Friday.

Before Russian troops descended on Ukraine, sparking punishing sanctions from shocked countries in the West, the primary concern on Wall Street was tied not to Putin, but to Federal Reserve Chair Jerome Powell.

What the Fed will do next to rein in inflation, which has been rising at the fastest rate in decades, has been the subject of fierce speculation. Increasingly, traders have braced for the Fed to aggressively hike interest rates from rock bottom and begin reducing the size of its massive balance sheet, which it built up to support the economy during the pandemic.

8:51 p.m. ET, February 27, 2022

BP will dump its 20% stake in Russian oil giant Rosneft

From CNN Business' Ramishah Maruf

BP (BP) is cutting ties with Rosneft in response to Russia's invasion of Ukraine.

The British company said in a statement Sunday that it would exit its 19.75% stake in the Russian state oil giant, describing Moscow's decision to attack its neighbor as "an act of aggression which is having tragic consequences across the region."

BP CEO Bernard Looney and former CEO Bob Dudley will also stand down with immediate effect from Rosneft's board, where they had served alongside Rosneft CEO Igor Sechin, a close ally of Russian President Vladimir Putin.

BP, which had called itself "one of the biggest foreign investors in Russia," said the changes would lead to the company taking a "material" charge in its first quarter earnings. Its operating profit in 2025 would be about $2 billion lower than forecast as a result of the accounting changes, it added.

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8:49 p.m. ET, February 27, 2022

What is SWIFT?

From CNN Business' Charles Rileyq

The White House, along with the European Commission, France, Germany, Italy, the United Kingdom and Canada, announced Saturday evening that they would expel certain Russian banks from SWIFT, the high-security network that connects thousands of financial institutions around the world, pledging to "collectively ensure that this war is a strategic failure for (Russian President Vladimir) Putin."

The Society for Worldwide Interbank Financial Telecommunication was founded in 1973 to replace the telex and is now used by over 11,000 financial institutions to send secure messages and payment orders. With no globally accepted alternative, it is essential plumbing for global finance.

Removing Russia from SWIFT would make it much harder for financial institutions to send money in or out of the country, delivering a sudden shock to Russian companies and their foreign customers — especially buyers of oil and gas exports denominated in US dollars.

The United States and Germany have the most to lose if Russia is disconnected, because their banks are the most frequent SWIFT users to communicate with Russian banks, according to Shagina.

But the pain could be widespread. Senior Russian lawmakers have said that shipments of oil, gas and metals to Europe would stop.