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Futures drop as Putin recognizes Ukraine rebel regions -Breaking

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© Reuters. Trader working at the New York Stock Exchange, New York City, U.S.A, February 18, 2022. REUTERS/Brendan McDermid

By Chuck Mikolajczak

NEW YORK, (Reuters) – U.S. stock futures plunged Monday as Russian President Vladimir Putin acknowledged two separatist regions of eastern Ukraine. This raised concerns over a potential war and increased fears about the possibility.

Putin called Ukraine an integral part Russia’s past, with the eastern Ukraine being made of old Russian lands. He was certain that Russia would back his decision. Putin directed the Russian army’s launch of what Moscow called peacekeeping operations in the region.

The White House responded by stating that U.S. President Joe Biden will soon issue an executive ordering prohibiting any economic activity between these two areas of Ukraine as well as individuals from the U.S. Britain pledged to impose sanctions.

“This infighting began in 2014 and Russia supported them, but not necessarily recognizing them, today he formalized the matter so that it now ramps up again,” Ken Polcari is managing partner of Kace Capital Advisors Boca Raton.

“The markets will respond and Russia’s push to invade the market, all threats, including the sanctions, will be put into action.”

The decline was 1.81%. Futures on e-mini fell by 1.37%, and then dropped by 2.65%.

The Presidents Day holiday saw the stock market close in the United States.

Prices for oil rose after news about Ukraine increased supply issues, pushing prices to $100 per barrel. The S&P energy sector has been by far the best performer in 2022, up nearly 22%, and one of only two S&P sectors that are positive on the year.

The U.S. equity market has been in pressure recently due to rising inflation. This led to the Federal Reserve deciding to increase its monetary policy. It is likely that this will begin at its March meeting. Meanwhile, tensions in Ukraine are growing.

The release of personal consumption expenditures data later in the week will cement the expectation that the central bank would raise interest rates next month.

The benchmark closed at 9.3%, just below correction territory.

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