Stocks massacred as Russia attacks Ukraine
The Nasdaq 100 index dropped 3% today, entering a bear market and dropping 20% from its all-time highs. It has also erased all the gains since 2021. Other indices fell sharply as well, including EU bourses. Russian MOEX crashed the most ever and was down 50% before recovering some losses.
Earlier today, Russian President Vladimir Putin announced a special operation to “protect” Ukraine’s Donbass (Donbas) region. Putin said that while Russia has no plans to occupy Ukraine, he urged Ukrainian forces to put down their arms and go home and that Russia would not let Ukraine secure nuclear arms, the report added. Furthermore, Moscow has declared safe passage for any Ukrainian soldier laying down their arms.
The government in Kyiv called it a “full-scale invasion” as it declared martial law and called for international support, including harsher sanctions on Russia. Western powers condemned the military incursion and vowed to step up penalties on Russia — President Joe Biden said the U.S. and its allies will impose “severe sanctions.” In addition, European leaders are planning sanctions that will target Russian banks.
Elsewhere, US bond yields fell sharply as traders rushed into safe-haven assets. As a result, gold and silver rocketed higher. Gold traded above 1,960 USD before correcting some gains, while silver rose above 25 USD.
Another victor from this conflict is oil, with the WTI benchmark rising above 100 USD for the first time since 2014. Moreover, many analysts believe that oil will continue toward 150 USD this year, further fuelling inflation globally.
Bears are winning so far
It looks like the bearish sentiment will continue in the following days. Bears could be targeting the 4,050 USD support zone, where May 2021 lows are.
The next level of support is expected to be near the psychological level of 4,000 USD. However, considering the current bearish pressure, we might see the index dropping below that zone pretty quickly.
Alternatively, the resistance is probably at 4,275 USD, and stocks must advance above it to stabilize from the short-term perspective.
SP500 daily chart, Source: Author´s analysis, tradingview.com
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