US pre-open: Futures in the red as Russian and Ukraine officials arrive at border

Wall Street futures were firmly in the red ahead of the bell on Monday as Russian and Ukraine officials arrived at the border to discuss potentially calling a stop to hostilities between the two sides after the Russian rouble crashed more than 40% in the wake of unprecedented international sanctions against the country's financial system.

As of 1230 GMT, Dow Jones futures were down 1.17%, while S&P 500 and Nasdaq-100 futures had the indices opening 1.38% and 1.22% lower, respectively.

The Dow closed 834.92 points higher on Friday, extending gains recorded in the previous session as market participants assessed risks stemming from Moscow's decision to enter Ukrainian territory.

The pre-market moves continue to come as a result of the ongoing conflict between Russia and Ukraine. Ukrainian forces have held on to key cities, including the nation's capital of Kyiv but the Russian advance into the country continued over the weekend, with Russian military vehicles entering Ukraine's second-largest city Kharkiv. There have been reports of fighting taking place in the streets and residents have allegedly been warned to stay in shelters.

Russian President Vladimir Putin also put Moscow's nuclear deterrence forces on high alert on Sunday amid growing opposition to his invasion. However, the Ukrainian Defense Ministry stated representatives for both sides had agreed to meet on the Ukraine-Belarus border "with no preconditions".

The Central Bank of Russia more than doubled its key interest rate to 20% from 9.5% following a currency move that saw the rouble crash against the US dollar as Washington joined allies in both Europe and Canada to block big Russian banks from the interbank messaging system, SWIFT. In addition to the Swift move, Russia's central bank has been isolated and blocked from deploying its international reserves, meaning Moscow has been all but cut off from the world's financial system

Swissquote's Ipek Ozkardeskaya said: "The US index futures kicked off the week in the negative. Any hopeful news could change the negative sentiment within minutes and send the international stock markets rallying. But the chance of seeing a diplomatic progress is rather slim.

"The softening Fed expectations due to the Ukrainian war could revive the tech bulls, as the Fed could abandon its back-to-back rate hike plans, as the war will take a severe toll on the global economic recovery and the Fed may need to accept a higher inflation to give the support the economy needs. Powell will testify before the American policymakers this week, and investors will try to catch any hint on how the Ukrainian war may re-shape the FOMC’s plans regarding the US monetary policy."

West Texas Intermediate crude future rose more than 5% to around $96.30 per barrel early on Monday, while Brent crude futures also rose nearly 5% to $102.75 per barrel. Natural gas futures were up 4% at $2.84. The yield on the benchmark 10-year Treasury note slipped around 6.4% basis points to roughly 1.92%.

On the macro front, an advance reading of January's goods trade balance will be published at 1330 GMT, while February's Chicago PMI and Dallas Fed manufacturing index will follow at 1445 GMT and 1500 GMT, respectively.

In the corporate space, HP, Zoom Communications and Groupon will all report earnings after the close.