S&P 500 drops to fresh monthly lows in 4250s as markets fret about potential Russia/Ukraine war

• US equities are down for a fourth successive session on Wednesday as fears of a Russian invasion of Ukraine build.
• The S&P 500 fell back under the 4300 level to then hit fresh monthly lows under 4260.

US equities were down for a fourth consecutive session on Wednesday fears about a full-scale Russian invasion of Ukraine continued to rise. The S&P 500 fell back under the 4300 level and hit fresh monthly lows under 4260, with bears eyeing a test of annual lows around 4222. At current levels near 4250, the index trades with losses of about 1.2% on the day. The Nasdaq 100 index dropped 1.7% to hit fresh annual lows under 13.7K, while the Dow fell a further 0.9% and back below 33.5K and is also eyeing a test of annual lows in the 33.3K area. The S&P 500 CBOE Volatility Index rose about half a point into the mid-29.00s, still a little below February’s double top in around 32.00.

Regarding the latest on the Russia/Ukraine front, following various sanction announcements from the likes of the US, UK and EU over the last two days, satellite imagery has continued to show a build-up of Russian troops on Ukraine’s borders. In response, Ukraine declared a national emergency and instructed citizens in Russia to flee, while Moscow started an evacuation of its diplomatic staff in Kyiv. Elsewhere, reports earlier in the session citing US intelligence officials said that the US had warned Ukraine of a Russian plan to mount a full-scale assault within the next 48 hours.

As investors question whether there will or won’t be a major Russia/Ukraine conflict, and ponder how Western sanctions against Russia in the event of a full-scale assault would impact the global economy, US equity markets unsurprisingly remain tetchy. In the absence of more certainty, and against a backdrop of expectations for a significant degree of Fed tightening this year, the prospect for any meaningful rebound looks slim at present.