Global equities skidded on Monday as warnings that Russia could invade Ukraine at any time drove oil prices to seven-year peaks, belted the euro. It sent investors scuttling back to the safe-haven government bonds they have been dumping all year. Asia slumped, Europe’s STOXX 600 share index tumbled 2.5%, Wall Street futures were down 0.6%.
The Indian market was deep in the red as Ukraine-Russia tensions, multi-year high inflation in the US stoking fears of aggressive interest rate hikes by the Fed and negative global cues roiled the sentiment. Which pushed the Sensex and the Nifty down more than 2 percent in early trade on February 14.
At close, the 30-pack Sensex was down 1,747.08 points, or 3 percent, at 56,405.84, and the Nifty was down 532 points, or 3.06 percent, at 16,842.80.
Amid weak global cues, the market again opened a gap-down and extended the losses as heavy selling was seen across the sectors, turning negative for the year 2022.
As the market posted its biggest single-day fall in the last 10 months. The Sensex and the Nifty are now down more than 9 percent from the record highs of October 2021.
Weak Global Sentiments
US stocks dropped on Friday on rising worries over escalating Ukraine-Russia tensions and the prospect of a tightened interest rate hike timeline from the U.S. Federal Reserve in response to decades-high inflation. The Dow Jones Industrial Average ended down 503.53 points, or 1.43 per cent, at 34,738.06; the S&P 500 lost 85.44 points, or 1.90 per cent, at 4,418.64; and the Nasdaq Composite dropped 394.49 points, or 2.78 per cent, to 13,791.15.
Asian shares slipped on Monday as warnings Russia could invade Ukraine at any time sent oil prices to seven-year peaks, boosted bonds, and belted the euro. The United States on Sunday said Russia might create a surprise pretext for an attack, as it reaffirmed a pledge to defend “every inch” of NATO territory. The cautious mood saw MSCI’s broadest index of Asia-Pacific shares outside Japan drop 0.2%, while Japan’s Nikkei lost 2.1 per cent
Russia –Ukraine crisis
The standoff between Russia and Ukraine continues to spook the global markets. As Russia continues to increase the number of troops along the border with Ukraine. It is escalating the tensions and waning hopes of any early resolution.
Consequently, investors are going in the risk-off mode, trying to avoid the riskier equity markets and putting funds into safer options.
“Sentiments have turned very negative for the short-term, with the heightened tension over the Ukraine crisis. Weakness in global markets is the direct fallout of the Ukraine crisis,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Crude Oil
The geopolitical crisis has led to a sharp rise in crude oil prices, which is another headwind for Indian markets. The crude is inching past $95 a barrel and fear of it crossing the psychological barrier of $100 in the coming days is increasingly looking real. Crude at an eight-year high is another major macro concern for India. Which meets more than 80 percent of its demand through imports.
Oil steadied on Monday after earlier hitting its highest in more than seven years on fears that a possible Russian invasion of Ukraine could trigger U.S. and European sanctions that would disrupt exports from one of the world’s top producers.
Brent crude was up 11 cents, or 0.1%, at $94.55 a barrel by 1107 GMT, after earlier hitting a peak of $96.16, the highest since October 2014. U.S. West Texas Intermediate (WTI) crude rose 9 cents, or 0.1%, to $93.19 a barrel, after earlier hitting $94.94, the loftiest since September 2014.
US Inflation and interest rate hikes
World markets are still trying to digest the record inflation in the US a deteriorating Russia –Ukraine crisis has spoiled the mood. The rise in crude will do more harm to the multi-year high inflation.
“After the release of the highest US CPI since 1982, the market started chattering about a 3 in 1 rate hike in March with the markets predicting the first one as early as the end of February,” said Amit Pabari, Managing Director, CR Forex Advisors. The Fed will be holding an emergency meeting later in the day to review the monetary policy.
There are a few funny tweets on today’s market crash:
How are the brokers comforting the new investors? This is what this Twitter user thought and shared:
#sharemarket
After #stockmarketcrashBrokers to New Investors be like:- pic.twitter.com/DpKdNGW5DR
— Devyani Kohli (@DevyaniKohli1) February 14, 2022
Then, here is Valentine’s Day post related to the stock market crash
Heart breaking…oops Market breaking Valentine Day!!#ValentinesDay2022 #stockmarketcrash #StocksMarket pic.twitter.com/nq4M9IrYC1
— Himanshu Gupta (@21Himanshugupta) February 14, 2022
“Even Market is Red on valentine’s day…,” another Twitter user posted and shared this meme:
Even Market is Red on valentine’s day… pic.twitter.com/cQvnelf8QX
— Suresh Meena (@SureshShirra) February 14, 2022
Me who is having zero rupees invested in market and neither having cash to invest after reading #stockmarketcrash#Sensex #Nifty pic.twitter.com/k65Uje7sTs
— Kiran Khedekar (@Kiran_Khedekar) February 14, 2022