Dow drops nearly 400 points in tense trade as oil spikes on Russian war

US stocks dropped on Monday and oil prices spiked as nervous investors eyed the war in Ukraine and Russia’s next move.

The Dow Jones Industrial Average closed down 166 points, or about 0.5%. It bounced off its lowest points of the day, when it was down more than 1.3%, as investors weighed how much the crippling of Russia’s economy would reverberate across global markets.

“The market is battling the assessment of serious contagion risks from cutting off Russian banks from Swift and what second-level financial effects may occur,” Eric Schiffer, the CEO of Los Angeles-based private equity firm The Patriarch Organization, told The Post. Swift refers to the payments system among global banks.

The broad S&P 500 index closed down only 0.25%, while the tech-heavy Nasdaq eked out a gain of 0.41%.

“The fear over the weekend was the potential likelihood of global financial crisis, but that concern has quieted significantly,” Schiffer said. “There is also a heightened probability that the invasion will reduce global growth and negatively impact inflation and the market is absorbing that reality.”

So far, the geopolitical turmoil has been good for defense stocks. Lockheed Martin and Northrop Grumman were up 5% and 6%, respectively, while cybersecurity firms like Crowdstrike also saw gains of more than 6%.

The finance sector is being squeezed as bank stocks like JPMorgan Chase were down, with JPM falling 4%. Citigroup, which has nearly $10 billion in exposure to Russia, according to Dow Jones, fell more than 4.4%.

Meanwhile, Elon Musk’s Tesla saw its share price soar by more than 7% while Nvidia rose more than 1%.

Investors were watching the bleak developments in Eastern Europe, where Russian President Vladimir Putin put his nuclear-armed forces on alert while diplomats launched peace talks in Belarus.

Meanwhile, oil prices jumped by nearly 5% in US markets as Russia’s connection to the global oil markets — it’s a big supplier — was likely to be crimped seriously.

In Russia, the economy is reeling after the United States and the European Union imposed sanctions on Moscow’s central bank as well as the country’s finance sector.

Russia’s currency, the ruble, fell around 30% against the US dollar on Monday, a result of the Western alliance’s decision to cut major Russian lender off from the SWIFT international messaging system.

Bitcoin, meanwhile surged 9.3% amid what analysts said was increased demand from Russian and Ukrainian buyers. The world’s most popular digital currency was trading around $41,200 on Monday afternoon, while ethereum was up 7.3% at $2,800.

The surge can be explained in part by Russians flocking to escape the ruble, according to longtime crypto investor Marc van der Chijs of First Block Capital. Van der Chijs said he had seen bitcoin selling for as much as $46,000 on some Russian exchanges — a roughly $5,000 premium over its US price.

“That seems to indicate that this urge in bitcoin price is because of Russian buying.”

Blockchain.com research chief Garrick Hileman, meanwhile, said that the cryptocurrency’s surge may be attributable to sanctions on Russia but could also be due to people converting fiat into cryptocurrencies in order to donate to the Ukrainian military and charities.

Trading volumes for conversions between the Russian Ruble and bitcoin as well as the Ukranian Hyrivna and bitcoin both surged immediately following Russia’s invasion, according to data from Kaiko Research.

More broadly, the markets situation was so dire that the Russian central bank prevented the stock market from opening in Moscow.

The US Treasury Department announced new sanctions that would immobilize any assets of the Russian central bank in the United States or held by Americans.

The Biden administration estimated that the move could impact “hundreds of billions of dollars” of Russian funding.

Overseas, the major indices took substantial losses. The FTSE in London dropped by 1% while the German DAX 30 fell 2%. France’s CAC 40 was also down around 2%.

In Asia, results were mixed as Hong Kong’s Hang Seng lost some 1.6% before ending the day down 0.2%. In Japan, the Nikkei 225 ended up 0.2% after being down most of the day. The Korean Kospi also ended up 0.8%.

The Shanghai Composite in China ended up 0.3%.