Jason Ryan, Staff

Global financial stocks tumbled on Monday, March 7 with increasing investor fears about the potential for economic damage and pressure on consumer spending as the price of oil soars following Russia’s invasion of Ukraine.

Lenders, investors and dozens of payment companies with links to Russia have been cutting ties with the country. These moves and news come amidst Western sanctions against Russia. While the United States’ sanctions have been aimed at limiting the flow of Western money and damaging Russia’s economy, Ukraine has called for the boycott of Russian energy exports.

Major accounting firms Deloitte and EY said on Monday they are cutting ties with Russia, mirroring moves by fellow Big Four accounting and consultancy firms KPMG and PwC. These firms and their work are often key to businesses obtaining international investor backing. 

Global stocks drop more than two percent, hitting a bear market as oil prices briefly rise to $130 a barrel. 

U.S. stocks fell in morning trading after oil prices burst above $130 a barrel Sunday night, threatening to upset calculations for company costs, consumer behavior and the overall course of inflation. The losses for major indexes deepened on Monday afternoon as investors dialed back on risk by selling shares of companies across much of the economy, with the tech-heavy Nasdaq Composite falling into a bear market by declining to 20 percent below its November high.  

S&P 500 banks (.SPXBK) fell 4.8 percent on Monday and the broader S&P 500 financial sector (.SPSY) closed down 3.7 percent as the yield curve — the difference between longer and shorter-dated U.S. Treasuries — narrowed, suggesting pressure on U.S. banks’ profitability. The bank index has fallen more than 10 percent since the conflict escalated on Feb. 24.  

Shares in U.S. payment companies tumbled on Monday with American Express Co. (AXP.N) closing down 8.0 percent after it said on Sunday it was suspending all operations in Russia and Belarus, joining Visa Inc. (V.N), which fell 4.8 percent and Mastercard Inc. which fell 5.4 percent after their similar announcements the previous day. Payments company PayPal Holdings Inc. (PYPL.O) is also down 6.3 percent.
Investors are growing fearful that the consequences of the war in Ukraine, now in its 14th day, could become increasingly dramatic for financial markets. This conflict has already  upset commodity markets, increased tensions between Moscow and the Western world and led to Russia being unplugged from much of the global financial system. It is also evident more economic sanctions are to come.