Stocks Surge, Oil Falls, Extending Volatility Amid Ukraine War

The war in Ukraine has fueled big moves in stocks, commodities, currencies and bonds. For investors, analyzing the direction of the conflict, fast-changing Western sanctions on Russia and their effects on the global economy is challenging. The turbulence has sent stock indexes spiraling, erasing much of the gains of the last year. Both the Dow industrials and the Nasdaq, which has entered a bear market, closed Tuesday at levels last seen roughly a year ago.

A surge in oil prices, given new momentum by the U.S. embargo on Russian energy, has raised concerns that sustained inflation and lower economic growth could collide. Major central banks were on track to begin tightening monetary policy before Russia invaded Ukraine. The European Central Bank is meeting Thursday. Federal Reserve Chairman

Jerome Powell

said last week that he planned to propose a quarter percentage-point rate increase at the central bank’s meeting this month.

“The market sentiment and the daily movement, and even the intraday movement, certainly has been whipsawed by the headlines surrounding the conflict in Ukraine,” said David Sekera,

Morningstar’s

chief U.S. market strategist. Mr. Sekera said investors who are overweight in energy stocks should consider rotating into equities.

Brent-crude futures, the international benchmark, declined 5.6% to $120.86 a barrel, reversing gains from earlier in the session. The U.S. has banned imports of Russian oil and gas, while Russian President

Vladimir Putin

has issued a decree banning exports of unspecified commodities and raw materials.

The jump in equity markets spurred investors to pull back from haven assets Wednesday. The ICE U.S. Dollar index, which tracks the currency against a basket of others, lost 0.9%, pulling back after a winning streak that pushed the greenback to its highest level in nearly two years. The yield on 10-year Treasury notes edged up to 1.917% from 1.870% Tuesday. Yields and bond prices move in opposite directions.

Gold prices, another asset that investors perceive as safer, lost 2.3%. Trading in the nickel market was suspended for another day, following violent moves Tuesday that sent the metal surging to briefly top the $100,000-a-ton mark for the first time. 

In early New York trading, travel stocks rallied, while energy shares declined. Cruise lines

Carnival

and

Royal Caribbean

added 9.6% and 6.1%, respectively.

American Airlines Group

and

United Airlines Holdings

added 5.8% and 12%, respectively. In contrast,

Occidental Petroleum

fell 2.6%,

Halliburton

declined 5.4% and

Marathon Oil

fell 3.9%.

In Europe, London-listed shares of

Polymetal International,

a Russian precious-metals company, surged 60%. Shares of banks also jumped. Austria’s

Raiffeisen Bank International,

which made roughly a third of its pretax profit in Russia last year, gained 15%.

Société Générale,

which also has exposure to Russia, jumped 11%. U.K.-based budget airline

easyJet

jumped 14%.

“It seems like markets are taking a breather today,” said

Viraj Patel,

global macro strategist at Vanda Research. “I don’t think…a lot of investors are thinking that we’re in a new regime and that the worst is over—I think it’s more of a dead-cat bounce and profit-taking [on safe havens] than the start of a new reversal.” 

In the cryptocurrency market, bitcoin mounted a comeback after its recent slide, rising about 9.6% from its 5 p.m. ET closing price to trade around $42,224. On Wednesday, President Biden will sign an executive order instructing agencies across the federal government to consider the creation of a U.S. digital currency. 

Overseas, the pan-continental Stoxx Europe 600 jumped 3.5%. Russia’s stock market remained closed, though its currency trading was open. In the offshore market, the ruble edged slightly lower in volatile trading to around 128 rubles to the dollar. Pricing of Russia’s currency has been choppy since the country imposed measures to stem its selloff, and Western banks have shunned Russian assets.

In Asia, stocks largely fell, tracking Wall Street’s Tuesday session. Japan’s Nikkei 225 lost 0.3%, while Hong Kong’s Hang Seng Index fell 0.7%. The Shanghai Composite dropped 1.1%.

—Caitlin Ostroff contributed to this article.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com and Joe Wallace at joe.wallace@wsj.com