US equity index futures are dropping this morning (Tue) in reaction to the latest real politick move by Russian President Vladimir Putin. Mon evening, Putin recognized the self-proclaimed separatist republics in eastern Ukraine and ordered the Defense Ministry to send “peacekeeping forces” to the regions.
Futures tied to the Dow Jones Industrial Average are down by about 460 points. S&P 500 futures have slid 1.7%, and Nasdaq 100 futures are off by 2.2%. The US stock market was closed Mon due to the President’s Day.
In Europe, the day had begun with optimism that Putin and US President Joe Biden might hold a summit. However, that optimism faded after Putin made a speech in the Kremlin which questioned the historical legitimacy of an independent Ukraine
European stocks closed at their lowest level in four months on Mon. The UK FTSE lost 0.39%, France's CAC 40 fell 2.04%, while the German DAX dropped 2.07%. They will likely fall more later today in response to Putin’s decision to recognize the breakaway eastern Ukrainian territories.
The White House response thus far has been restrained. Biden has only put economic sanctions on the two break-away regions. However, more sanctions are expected to be announced tomorrow. On Fox News, US Sen Lindsey Graham called to "destroy the ruble and crush the Russian oil and gas sector.”
“The European Union will react with sanctions against those involved in this illegal act,” wrote European Commission President Ursula von der Leyen and European Council President Charles Michel in a joint statement.
In early trade this morning, Brent crude futures jumped US$2.74, or 2.91% to US$96.28 a barrel. US West Texas Intermediate crude futures rose US$2.79, or 3.06 per cent, to US$93.86 a barrel. \
US gold futures are up about $12 to US$1912 per ounce.
The safe-haven yen has hit a near three-week high, up 0.2% to 114.50 to the US dollar. The euro dipped about 0.1% to a one-week low of US$1.1297.
The Russian rouble sank more than 3% against the US dollar on Mon, to a 15- month low of 80.3930 to the US dollar.
Russia’s benchmark MOEX index slumped 11%, it