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Dow Jones Futures Signal ‘Swift’ Market Losses As Russia Banks Targeted Amid Ukraine Invasion

Dow Jones Futures Signal 'Swift' Market Losses As Russia Banks Targeted Amid Ukraine Invasion
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Due to Russia’s continued invasion of Ukraine and rising Western sanctions, Dow Jones futures, S & P 500 futures, and Nasdaq futures all fell on Sunday evening. Last week, the stock market plummeted to new lows before roaring back. Stocks, bonds, crude oil, and currencies are all expected to have a tumultuous overnight trading session.

Ukraine continues to fend off Russian advances, particularly around Kyiv, the capital, and Kharkiv, the second-largest city. Russia, on the other hand, continues to send in additional troops and weaponry, capturing crucial ground on Sunday. The United States and its allies are imposing tough new sanctions on Russia, while Europe is abruptly changing decades of security strategy.

On Sunday, Putin put Russia’s nuclear deterrent forces on high alert.

Russia Will Be Punished ‘Quickly’

Late last week, the stock market recovered in part due to relief that Western sanctions would not be as severe as anticipated. However, the United States, the European Union, the United Kingdom, and Canada agreed on Saturday to suspend several Russian banks from the Swift payment system and to target Russia’s central bank.

Swift is a network that connects all of the world’s banks to process payments worth trillions of dollars. Banks will not accept payments or transfers from Russia unless they have Swift access. Last week, President Biden did not take that move, citing objections from numerous European countries. However, as a reminder of how quickly opinions are shifting, those European countries are now advocating for considerably harsher penalties.

The European Commission’s head, Ursula von der Leyen, stated that Western nations will exclude a “certain number” of Russian banks from the Swift network. Payments for energy, such as natural gas purchases in Europe, are exempt from the limitations. “Energy sanctions remain on the table,” White House press secretary Jen Psaki said on Sunday.

Many Western banks may decide to “self-sanction,” refusing to do business with any Russian financial institutions, whether or not they are formally targeted.

In a separate move, the West will go after Russia’s central bank, thereby freezing its foreign funds. The financial system and economy of Russia will be severely strained as a result of these activities.

On Sunday, Japan said that it would impose similar penalties on Russian institutions, as well as measures against Russian President Vladimir Putin.

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On Sunday, Switzerland’s president said it’s “quite likely” that his nation, a financial powerhouse, will apply similar sanctions against Russian institutions on Monday.

The US and its partners would also “create a multinational Transatlantic task force to identify, track down, and freeze the assets of sanctioned Russian corporations and oligarchs — their yachts, homes, and any other ill-gotten wealth,” according to the White House.

Russia might respond by cutting off gas to Europe or restricting crude oil and other critical raw material shipments. For the time being, it appears to be improbable. However, simply the idea of it might push commodities prices further higher.

Bank runs were already underway, as Russians rushed to withdraw cash from ATMs in the fear that withdrawals would be restricted.

European Security and Defense Policy

Germany reversed its long-standing objection to arming Ukraine on Saturday, allowing numerous other countries to do so as well. Chancellor Olaf Scholz said on Sunday that defense expenditure will be boosted to above 2% of GDP, the formal NATO level that Germany has long violated.

Scholz also stated that he supports additional LNG import facilities, increased natural gas storage, and other energy independence initiatives. According to rumors, Germany’s coalition government is considering reversing its nuclear plant phaseout.

For the first time, the European Union committed to funding the purchase and delivery of weaponry on behalf of Ukraine. According to a high-ranking EU official, many member countries will even provide Ukraine with combat planes using EU cash.

Sweden will supply 5,000 AT4 anti-tank guns to Ukraine, along with body armor, helmets, and other items, breaking with precedent.

All Russian-registered planes were barred from entering the EU and Canada’s airspace. Pro-Kremlin media outlets were shut down by the EU. It will also expand its Russia sanctions to Belarus, which is involved in the invasion of Ukraine.

Separately, the US and French governments urged their citizens to leave Russia.

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