U.S. stock futures and global equity indexes dropped as the threat of a potential ban on Russian oil imports spurred a surge in energy prices that investors worry could smother economic growth, especially in Europe.

Futures tied to the Dow Jones Industrial Average, S&P 500 and Nasdaq-100 declined between 1.4% and 1.6%, indicating U.S. markets could fall in Monday’s trading. The Dow last week recorded its fourth straight week of losses.

The pan-continental Stoxx Europe 600 fell 2.4% Monday. Germany’s DAX stock index and France’s CAC 40 fell into bear market territory. Surging oil and gas prices are spurring concerns that Europe, an energy importer dependent on Russia, could fall into recession. 

The war in Ukraine, now in its 12th day, has roiled commodity markets, increased tensions between Moscow and the West and led to Russia being unplugged from much of the global financial system.

Oil prices soared, with global benchmark Brent crude jumping 5.7% to $124.87 a barrel. Earlier Monday, it topped $130, the highest level since July 2008. The U.S. equivalent, West Texas Intermediate, rose 5.8% to $122.46. The U.S. and European partners are discussing a ban on imports of Russian oil, Secretary of State Antony Blinken said Sunday. A European gas benchmark surged 38% to a record high. 

Rising oil prices are triggering fears about demand destruction and a global recession, said Michael Hewson, chief markets analyst at CMC Markets. “It’s hard to see much in the way of significant upside for stock markets now against a backdrop of continued escalation” in Ukraine, he said. 

Higher commodity prices and the resulting accelerated inflation are complicating the next moves of major central banks, who were largely set to begin tightening monetary policy before the war began. The European Central Bank is meeting this week, and investors will be watching for changes to its growth outlook and what this could mean for policy. 

“This toxic cocktail poses a huge problem for central banks. Do they tighten monetary policy and risk pushing the world into a recession even quicker or do they allow inflation to rip higher, which would do the same thing?” Mr Hewson said. Inflation concerns are weighing on the bond market, he added.

The yield on the benchmark 10-year Treasury bond edged up to 1.741% Monday from 1.722% Friday, reversing direction after posting the biggest one-week decline since March 2020 last week. Yields rise when prices fall.

Other haven assets rallied. Gold rose 1.9% to above $2,000 a troy ounce, the highest level since August 2020. The greenback strengthened, with the WSJ Dollar Index rising 0.5%.

The Russian ruble seesawed, tumbling over 10% against the dollar and reaching a new record low at 137 rubles to $1, before recouping some losses in a likely signs of market illiquidity and potential intervention by the central bank, analysts said. Its stock market is closed and will remain so until at least Tuesday, according to Russia’s central bank. It hasn’t traded normally since Feb. 25. 

Eastern European currencies continued to come under pressure, with the Polish zloty and the Hungarian forint weakening around 2% and 4%, respectively, against the greenback. 

The war in Ukraine has raised questions about the global outlook for economic growth and inflation.


Courtney Crow/Associated Press

Shares of European banks declined further. The Euro Stoxx banking subindex fell 5.9%, extending last week’s 19% drop. Those with substantial exposure to Russia were among those hit the hardest, with Raiffeisen plunging 10%,

Societe Generale

falling 9%and ING down 7.9%. ING said Friday that the sanctions on Russia affected $700 million of its loans. 

“For some banks it’s about exposure to Ukraine and Russia. A second impact is rising credit risk more broadly as the economy is coming under pressure,” said

Sebastien Galy,

a macro strategist at Nordea Asset Management.

Investors appear to be in classic flight-to-safety mode and stocks are suffering as a result, said Kelvin Tay, the Singapore-based regional chief investment officer for


Very high oil prices will function as “a tax on the global economy, and therefore global growth will actually have to slow,” he said.

Stock benchmarks in the Asia-Pacific region fell sharply, with South Korea’s Kospi Composite declining more than 2% and Japan’s Nikkei 225 shedding 2.9%, to close at its lowest since November 2020. The mainland Chinese CSI 300 and Hong Kong’s Hang Seng Index both fell more than 3%

Since Russia invaded Ukraine at the end of February, the U.S. and allied countries have imposed heavy sanctions on Russia. WSJ’s Shelby Holliday dives into how these sanctions are affecting everyone from President Vladimir Putin to everyday Russian citizens. Photo: Pavel Golovkin/Associated Press

Write to Clarence Leong at clarence.leong@wsj.com and Anna Hirtenstein at anna.hirtenstein@wsj.com

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