Nasdaq, Dow Jones, S&P 500 futures fall with Ukraine tensions rising

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Stock index futures point to further losses to start the week Monday after a selloff last Friday.

The prospect of Russia invading Ukraine is growing with little progress on the diplomatic front.

Nasdaq 100 futures (NDX:IND) -1% are the weakest, with S&P futures (SPX) -0.9% and Dow futures (INDU) -0.7% not far behind.

The S&P sectors are all lower premarket, with Materials and Info Tech struggling the most.

The Treasury yield curve is flattening more, with the 10-year yield down 3 basis points to 1.92% and the 2-year yield up 1 basis point to 1.53%.

Last week ,”2yr Treasury yields increased an historic +21.4bps on Thursday following the CPI data, and +19.0bps on the week (-7.9bps Friday),” Deutsche Bank’s Jim Reid wrote. “10yr Treasury yields broke the 2.0% threshold for the first time since summer 2019, hitting a peak of 2.06% before the late Friday (-9.2bps on the day) rally that saw it close at 1.937% and ‘only’ +2.9bps on the week.”

“Given the predictive power of the 2s10s curve it was worrying that it ended the week at 42.5bps (declining -16.8bps this week, -1.9bps Friday), the lowest since August 2020.”

Crude oil is up again, with WTI pushing further past $93 per barrel.

“Tensions over Ukraine have pushed the oil price higher,” UBS chief economist Paul Donovan wrote. “Markets are still reluctant to price in extreme scenarios. The impact of a higher oil price depends on how long it lasts – a short spike is economically negligible. Higher oil prices transfer money from oil consumers (bad for their growth) to oil producers (good for their growth).”

“The impact on global growth depends on whether oil producers spend or save the additional oil revenue,” he added. “Higher oil prices raise consumer inflation expectations (oil is a frequent purchase). The effect is to redistribute demand amongst consumers, diverting money from other areas to pay for fuel. That may force some prices to come down as demand weakens further. Ultimately, a sustained oil price increase acts on oil consumers much like a tax increase.”

In M&A news, Lockheed terminated its agreement to buy Aerojet Rocketdyne.

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