Oil prices rose to more than $103 per barrel, futures pointed to heavy losses for European markets and shares in Moscow fell almost 30 per cent after Russia’s president Vladimir Putin launched a military invasion of Ukraine.
Brent crude rose as much as 6.4 per cent, the first time the international benchmark has crossed the $100 threshold since 2014. West Texas Intermediate, the US marker, climbed about 6 per cent to $97.71.
“If this situation continues to deteriorate I wouldn’t be surprised to see Brent at $120 a barrel, and that is really the point you’d expect to see co-ordinated intervention [by global suppliers],” said Robert Rennie, global head of market strategy at Westpac.
The military action in Ukraine has spurred investors to minimise losses by dumping risky assets in favour of havens.
As explosions were reported near Kyiv early Thursday morning, the Moscow Exchange suspended all trading. When trading resumed hours later, the benchmark Moex index dove a record 28.9 per cent. The index is down 42 per cent this year.
Futures pointed to heavy losses for European shares, with the Euro Stoxx 50 set to drop almost 5 per cent at the open, while the FTSE 100 was expected to fall about 3 per cent.
The S&P 500 was set to lose 2.5 per cent after closing Wednesday’s session sharply lower, while the tech-focused Nasdaq was projected to fall more than 3 cent, putting the index on track to drop more than 20 per cent from its most recent peak and into a bear market.
In Asia, Hong Kong’s benchmark Hang Seng index fell more than 3 per cent, while China’s CSI 300 shed 2 per cent and Japan’s Topix closed 1.3 per cent lower on Thursday.
Investors said that simultaneous falls in the Tokyo-listed shares of technology group SoftBank, clothing company Fast Retailing and robot maker Fanuc were a signal that investors were panic-selling exchange traded funds that track Japan’s benchmark index.
Investors seeking refuge from share price falls piled into sovereign bond markets, driving down yields. The yield on 10-year US Treasuries fell 0.11 percentage points to 1.882 per cent. The price of gold rose about 2 per cent to more than $1,943 per troy ounce.
In currency markets, Moscow’s offensive sparked a sell-off for the Russian rouble, which sank 10.2 per cent to a record low of Rbs89.99 against the dollar, according to Bloomberg data. The euro also fell 0.6 per cent against the greenback to $1.1243.
The market moves came after Putin said he had ordered a military operation in Ukraine’s Donbas region that has been condemned by the US and many other European and western governments.
“All responsibility for the possible bloodshed will be fully and completely on the conscience of the ruling regime,” the Russian president said in an address broadcast on state television.
Additional reporting by Leo Lewis in Tokyo