March 4, 2014 in Business

Global stocks slide over concern about Ukraine

Steve Rothwell Associated Press
 

NEW YORK – Russia’s military advance into Ukraine rattled global markets Monday.

U.S. stocks fell the most in a month and the price of crude oil rose sharply as traders feared Russian exports could be affected by sanctions. Gold and bond prices rose as investors sought safety.

The Standard & Poor’s 500 index had its biggest drop since Feb. 3, following markets in Europe and Asia lower, as Russia’s military tightened its grip on the Crimea region of Ukraine.

“Financial markets are doing exactly what you would expect them to,” said Phil Orlando, chief equity market strategist at Federated Investors. “You have no idea what is going to happen and how this is going to play out.”

The S&P 500 index fell 13.72 points, or 0.7 percent, to 1,845.73, the biggest drop since Feb. 3.

The Dow Jones industrial average dropped 153.68 points, or 0.9 percent, to 16,168.03. The Nasdaq composite fell 30.82 points, or 0.7 percent, to 4,277.30.

European markets fell even more. Germany’s DAX sank 3.4 percent and Russia’s benchmark stock index plunged 12 percent.

“Europe gets a lot of energy supplies from Russia,” said David Kelly, chief global strategist at JPMorgan funds. “So, Europe would be a lot more directly affected by a trade war with Russia than the United States would.”

Kelly said the most likely scenario is that Russia and Western powers, including the U.S., will reach a compromise relatively quickly. That would send stock prices higher.

As investors sold risky stocks, they bought safer assets such as gold and U.S. government debt securities. The dollar and the Japanese yen also increased in value.

The price of gold rose $28.70, or 2.2 percent, to $1,350.30 an ounce, its biggest gain of the year. The yield on the 10-year Treasury note, which moves inversely to its price, fell to 2.60 percent from 2.64 percent on Friday.

The price of crude rose following warnings by Washington and other governments that Russia, a major oil exporter, might face sanctions after it seized control of Ukraine’s Crimean Peninsula. Russia was the world’s second-largest producer of oil in 2012, accounting for 12.6 percent of global supplies, according to the International Energy Agency.

The price of crude oil climbed $2.33, to $104.92 a barrel, its highest price of the year.

Russian stocks that trade in the U.S. were also hit hard. Mechel, a mining company, fell 18 cents, or 9.5 percent, to $1.72; Phone company VimpelCom fell 51 cents, or 5 percent, to $9.65. Energy company LukOil fell $3.20, or 5.9 percent, to $51.20.

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