U.S. markets, which were pointing higher in pre-market trading earlier Tuesday morning, have reversed course and are now trading down amid rising angst over plunging oil prices and Russia’s currency.
In a sign of growing uncertainty on Wall Street over the fallout from plunging oil prices (West Texas Intermediate crude is down another 2.7% to $54.39 a barrel, a fresh 5 1/2 year low. But the big story of the morning is the continued plunge in Russia’s ruble, which cratered as much as 17% vs. the U.S. dollar this morning to a record low, despite a surprise move late last night by Russia to hike interest rates to 17% from 10.5% in an attempt to stem capital flight from the country and stabilize their currency. But that move has not woarked and appears to have shaken investors.
“The slide in oil continues to drive markets,” Barclays told clients in an early morning report. Russia, which gets the bulk of its revenue from energy exports, has been hit hard by the sharp slide in oil prices, which have been cut in half since their peak in late June. The falling price of oil puts Russia’s currency in jeopardy. A falling currency in Russia is damaging, as it means consumers and the country itself has less purchasing power.