STI falls 3.5% as global stocks plunge amid Ukraine worries

Global stocks dived and oil soared yesterday as investors fled to safety after Russian President Vladimir Putin launched an invasion of Ukraine.

Futures for the S&P 500 and Nasdaq both slid more than 2 per cent, putting the tech-heavy Nasdaq at risk of a bear market.

European markets plummeted, with the Stoxx Europe 600 index down 4.1 per cent as at 1.13pm in London.

"The markets are pricing in a full-scale war now that Putin has finally launched attacks on Ukraine," KGI analyst Joel Ng told The Straits Times, referring to Russian President Vladimir Putin.

In Singapore, shares moved sharply lower on early news of the attacks, with the Straits Times Index (STI) closing 3.5 per cent lower.

The last time the STI had a steeper one-day drop was on March 30, 2020, when it fell 4.5 per cent after relief from global fiscal support measures faded with uncertainty over the pandemic.

Compared with its regional peers, Singapore shares were among the most affected in Asia. Major indexes in Japan, Hong Kong, South Korea and Australia closed between 1.8 per cent and 3.2 per cent lower.

"The STI has fallen the most among Asian bourses since it was also the index that rose the most year to date," said Mr Justin Tang, head of Asian research at United First Partners.

"Investors may be seeing the opportunity to take profit, as many of the component stocks on the STI are dividend-yielding stocks.

"With oil prices rising, many may also be offloading Reits (real estate investment trusts) in anticipation of higher interest rates to come," he added.

Dragging down the STI were bank stocks OCBC, UOB and DBS, which have a combined 45 per cent weighting in the index, after OCBC posted underwhelming fourth-quarter earnings due to higher expenses and lower trading income.

OCBC and DBS each lost more than 4 per cent, while UOB shed more than 5 per cent.

Singapore Airlines tumbled more than 6.2 per cent, while in-flight caterer and ground handler Sats lost over 5 per cent, due to concerns that "higher oil prices may be passed on in the form of higher air fares, which could dampen demand for travel", Mr Ng said.

But against the sea of red, oil and gas plays RH PetroGas and Rex International chalked up gains of nearly 12 per cent and 4.8 per cent, respectively.

The run-up in gold prices also rubbed off on gold producer CNMC Goldmine Holdings, which jumped 4.6 per cent.

Brent crude futures soared past US$100 a barrel for the first time since 2014 amid fears of disruptions to global energy supply. Natural gas in Europe rose as much as 41 per cent, while prices of metals such as gold, aluminium and nickel, and wheat and soya bean spiked.

Russia is a key seller of multiple commodities to global customers, with Europe relying on it for about a quarter of its oil and a third of its gas. The increase in the prices of key commodities is contributing to a surge in inflation already at its highest level in decades.

This is posing a cost-of-living crisis for millions around the world and may force central banks to raise interest rates.

Both inflation and higher rates may derail the global economy's rebound from the pandemic.

Safe-haven gold jumped as much as 3.4 per cent to US$1,973.15 an ounce, the highest since September 2020.

The US dollar went up more than 0.5 per cent against a basket of other major trading partners to 96.715. The euro was down 0.8 per cent on the day at US$1.1220.

The Russian rouble turned violently lower after posting small gains early in the session.

It was last down nearly 4 per cent on top of a 3 per cent slump against the US dollar on Wednesday.

The sell-off spread to cryptocurrency markets, pushing Bitcoin below US$35,000.