U.S. Major Stock Indexes Drop 3% in February Amid Ongoing Russia-Ukraine Crisis

Global stock markets tumbled in February as the Russia-Ukraine conflict escalated, driving oil prices above $101 per barrel and pushing grain prices higher.

International equities faced significant pressure due to the ongoing war, while financial sanctions imposed worldwide began to impact Russian business activities. Investors sought refuge in gold and government bonds, causing bond yields to fall.

Key Highlights

• Global stocks suffered losses as companies and governments imposed restrictions on Russian operations.
• Safe-haven assets such as gold and government bonds increased in value amid market uncertainty.
• Crude oil prices exceeded $101 per barrel; grain prices rose, and Target shares surged by 11%.

In the U.S., all three major stock indices opened March lower, following the European Stoxx 600's downward trend. February saw the S&P 500 decline over 3%, the Dow Jones Industrial Average fall more than 3.5%, and the Nasdaq drop 3.4%.

Oil prices climbed as the International Energy Agency (IEA) considered releasing reserves to stabilize supply. Meanwhile, the euro weakened against the U.S. dollar, and the Russian ruble depreciated further.

Cryptocurrency markets showed strength, with Bitcoin prices rising nearly 17%, surpassing $44,700.

Numerous U.S. companies, including The Walt Disney Company, Meta Platforms, Alphabet's YouTube, Visa, and Mastercard, have restricted or reduced their business exposure in Russia due to the conflict.

Upcoming corporate earnings reports include Hewlett Packard Enterprise, Salesforce.com, and Target Corporation, which anticipates continued sales growth following a 9% revenue increase during the holiday quarter. AutoZone shares also rose after reporting better-than-expected earnings.

The Institute for Supply Management (ISM) is expected to report an increase in manufacturing activity for February, rebounding from a 14-month low in January. Additionally, the Commerce Department is likely to reveal a 0.2% rise in construction spending for January, mirroring December's growth.

Today's Market News

The New York Stock Exchange (NYSE) and Nasdaq suspended trading of several Russian stocks listed in the U.S. due to sanctions. NYSE halted trading of Mobile TeleSystems, Mechel PAO, and Cian, while Nasdaq stopped trading Yandex and Ozon Holdings.

HP Inc. raised its profit forecast for the year despite anticipated impacts from Russian sanctions, supported by strong computer sales but acknowledging near-term challenges.

Lucid Group's shares declined after the company announced a 40% reduction in vehicle production for 2022, citing supply chain issues.

The Federal Trade Commission (FTC) is reportedly preparing to review Amazon's $8.5 billion acquisition of MGM Studios, with a potential legal challenge expected soon.

Zoom's shares dropped following a disappointing revenue forecast for Q1 and the full year, with fourth-quarter growth slowing to 21%, the company's lowest rate to date, increasing pressure to sustain post-pandemic expansion.

Albertsons Companies initiated a strategic review to explore future options and enhance shareholder value, just two years after going public.

In-Depth: Citigroup's Exposure to Russia

Citigroup disclosed nearly $10 billion in total exposure to Russia as of the end of 2021, exceeding earlier estimates and raising concerns about potential financial losses.

The bank reported $5.4 billion in loans, securities, and funding commitments, along with $1 billion in cash held at the Bank of Russia and $1.8 billion in reverse repurchase agreements. Additional exposure to Russian counterparties amounted to $1.6 billion.

Some assets are tied to Citigroup's consumer banking operations in Moscow and St. Petersburg, which the bank is seeking to sell. Recent sanctions may complicate this process.

Citigroup holds the largest Russian exposure among U.S. banks, although it manages over $2 trillion in total assets.

Shares of Citigroup fell nearly 5% yesterday and have declined 6% year-to-date.

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