Dow Jones futures tumbled Monday evening, along with S&P 500 futures and Nasdaq futures. Russian President Vladimir Putin recognized two separatist regions of Ukraine as independent, sending in Russian troops. The U.S. and other Western leaders condemned the move, promising limited sanctions for now.
Futures turned positive Sunday night when the White House said President Joe Biden had agreed “in principle” to a summit with Russia’s Putin. Initial enthusiasm for a Biden-Putin summit faded as Russia said there were “no concrete plans” yet.
The stock market rally suffered significant damage last week, with the major indexes below key support and starting to move toward their Jan. 24 lows. Ukraine invasion fears are weighing heavily on the market rally, which is already dealing with inflation and other big headwinds. Investors should take a defensive posture with minimal exposure.
U.S. stock markets are closed Monday in observance of the Presidents Day holiday.
Putin Recognizes Separatist Regions
Putin, in a televised address, recognized the independence of the separatist Donetsk and Luhansk provinces, later ordering Russian troops in those areas as “peacekeepers.” That violates the 2015 Minsk accords following the last Russian-Ukrainian conflict. The move is widely seen as effectively annexing those parts of eastern Ukraine, while allowing Putin to claim he’s not invading “Ukraine.”
Putin may feel he can recognize the separatist regions and effectively annex them with minimal sanctions, after annexing Crimea in 2014. The move also could split the West’s unity in the Ukraine crisis.
U.S., NATO and European leaders all condemned the move, but what actions will they take. Biden will impose sanctions on the Donetsk and Luhansk provinces, a relatively modest step, but said more would come. White House said these initial steps were separate from “swift and severe economic measures” should “Russia further invade Ukraine.” The U.K. and EU also say they will take new limited measures in response to Putin’s actions, with Germany and Italy among those urging caution.
Will Putin continue with a broader Ukraine invasion, which would involve a major land war in Europe and definitely trigger major sanctions? If nothing else, expect Russian troops to remain mobilized, if only to pressure Ukraine and the West to accept the latest carveout.
Putin, in his emotional address of grievances and justifications, said Ukraine was the creation of communist Russia and that it was “madness” that various republics were allowed to leave as Soviet Union broke apart. Those comments show that Putin sees Ukraine and the Baltic states of Latvia, Estonia and Lithuania as illegitimate.
The Baltic states are part of NATO. Biden has said that while U.S. troops won’t fight for Ukraine, America stands fully behind all NATO nations.
Biden-Putin Summit Doubts
President Biden agreed “in principle” to meet Putin, White House Press Secretary Jen Psaki said Sunday night in a…
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