European stocks fell, commodities rose, and the euro hit its weakest level against the dollar in almost two years after the US said it was discussing a ban on oil imports from Russia.
The Stoxx 600 stock index, which fell 7% last week, its worst performance since March 2020, shed another 2.8% in early trading on Monday after a sharp fall in Asia.
The price of gold topped $2,000 for the first time since August 2020 in Asian trading as investors sought a haven from market risk in the safe-haven asset. The dollar index, which measures the US currency against six other currencies, hit its highest level since May 2020. The euro fell 0.4% to $1.08, also the weakest level against the dollar since May 2020.
International oil benchmark Brent rose nearly 18% to $139.13 a barrel in early trading on Monday, the highest level since 2008, before falling 9 percent to $128.68.
Global financial markets have been especially volatile since late February, when Russian President Vladimir Putin launched a full-scale invasion of Ukraine. Further turmoil erupted on Monday as traders assessed the economic implications for goods from two producing countries falling out of global supply chains.
US Secretary of State Anthony Blinken said on Sunday that Washington is in “very active talks” with European allies. Nancy Pelosi, speaker of the US House of Representatives, said Congress is “studying” legislation to ban Russian oil imports.
“The world is very unprepared for this shock,” said Robert Rennie, head of global market strategy at Westpac. He said it was unclear whether the US ban only applies to oil or all energy imports from Russia, but said the latter would have a “catastrophic impact” on energy prices.
In Russia, the ruble weakened to 138.5 rubles against the dollar, setting a new record low for the Russian currency. The currency was trading at around 81 rubles to the dollar a day before Russia’s invasion of Ukraine.
Hong Kong’s Hang Seng shares were the biggest loser in Asia, dropping 3.7% and approaching their lowest close since the start of the coronavirus pandemic. Tokyo’s Nikkei 225 fell 2.9% in its worst trading day since the end of January.
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The prospect of expanded sanctions affecting Russian oil supplies has stirred up global commodity markets already unsettled by the growing difficulty in dealing with Russian suppliers. European natural gas futures rose 38.7% on Monday morning to 267 euros per MWh, a new all-time high. A year ago the price was about 16 euros.
Other commodities, including palm oil and nickel, hit multi-year highs since the start of the war. On Monday, the price of palladium, a key component in automotive catalytic converters, jumped 5.4% to a record high of over $3,174 an ounce.
Wheat futures rose 7% to $12.94 a bushel.
In Chinese markets, iron ore futures rose 7.6% to 874.50 yuan ($138.53) a ton, while nickel rose 12% to a record high of 210,950 yuan a ton.
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