S&P 500 tumbles amid global equity market sell-off after Russia commences Ukraine invasion

• US equity markets tumbled in line with their global peers and other risk assets on Thursday as Russia invaded Ukraine.
• But sentiment took a turn for the better at the open; US equities pared a decent portion of pre-market losses.
• The S&P 500 was last down just under 1.5%, having been as much as 2.6% down in the pre-markets.

US equity markets tumbled in line with their global peers and other risk assets on Thursday as worst fears were confirmed, with Russia commencing a full-scale invasion of Ukraine. Sentiment did take a turn for the better after the open of US trade, however, seemingly as a result of profit-taking by holders of short positions, or amid dip-buying. The S&P 500 was last trading in the 4170 area, having seen a substantial more than 1.5% rally from pre-market trade lows just above 4100. At current levels, the index trades with losses on the day of slightly more than 1.0%.

The rebound was driven by tech and growth stocks as investors flocked into US bonds, pushing yields down and reducing the opportunity cost of holding high earnings ratio stocks. The Nasdaq 100 index was last trading just 0.5% down just below the 13.5K level, a more than 3.0% rebound from pre-market trade lows just above 13.0K. Meanwhile, the Dow, an index more weighted towards economically sensitive stocks and less towards tech/growth, was last trading down about 1.9%, reflecting broader fears about the impact of the new European war on the global economy.

The US, UK and EU all promised to hit Russia with unprecedented economic sanctions, fanning investor fears the conflict will have a highly inflationary impact (European gas futures are already up around 50% on the day). “I do not think many investors have dealt with the combination of surging inflation, which was last really seen in the early 80s, combined with full-scale military operation in Europe, which again, the last time that happened was second world war,” observed one analyst. “It's a confidence knocker,” they added, “saying that this is sort of uncharted territory for a lot of people”.