Stocks reversed early gains on Thursday with Europe’s Stoxx 600 Index slightly lower as most US futures slipped.
Utilities led declines, while mining and energy stocks advanced as oil soared to the highest level since 2008.
Commodities markets from metals to oil and gas have been upended by the Ukraine crisis as big corporates withdraw from Russia, lenders pull back from financing deals and the threat of new sanctions deters buyers. European natural gas jumped to a fresh record, while zinc hit the highest since 2007 and other industrial metals extended a powerful rally.
Treasuries were little changed after sharp losses on Wednesday, though the US 10-year yield remains below the 2 per cent levels seen before Russia’s action. The dollar and gold ticked up.
Russia's ostracism continues: MSCI and FTSE Russell are cutting Russian equities from widely-tracked indexes, while the London Stock Exchange suspends dozens of Russian depositary receipts from trading, isolating the stocks from a large segment of the investment-fund industry.
Russia's credit rating was cut to junk by Moody's Investors Service and Fitch Ratings amid doubts about its capability and willingness to service debt.
Meanwhile, monetary authorities appear intent on pushing ahead with tighter policy. Federal Reserve Chair Jerome Powell voiced support for a quarter-point Fed rate hike later this month and indicated the central bank may have to take tougher action if price pressures don't start to ease. The bond market expects about five quarter-point moves this year.
The Fed chair managed to "appease risk-markets by ruling out a 50 basis-points hike in March, while simultaneously promising inflation vigilance at following meetings," Citigroup strategists William O'Donnell and Edward Acton wrote in a note.
"It's really time for investors to be prepared for more volatility, especially in the bond markets," as the Fed has yet to commence balance-sheet reduction, Nancy Davis, chief investment officer at Quadratic Capital Management said. - Bloomberg
