Stocks slide, commodities spike as Ukraine war shakes markets

Data showing a vibrant U.S. jobs market strengthened the dollar and spurred commodity prices higher, but the war in Ukraine overshadowed the blowout report as the euro plunged on the worsening outlook for slower European economic growth.

The U.S. unemployment rate fell to a two-year low of 3.8% as job growth surged in February, a bright spot for an economy that faces mounting headwinds from rising inflation, tighter monetary policy by the Federal Reserve and geopolitical tensions.

The euro tumbled below $1.10 for the first time in almost two years and hit a fresh seven-year low against the safe-haven Swiss franc as Russian forces seized the largest nuclear power plant in Europe and fighting raged elsewhere in Ukraine.

European stocks sank to near one-year lows, with the pan-regional STOXX 600 index sliding 3.56% to increase losses for the week to 7% - its worst weekly decline since the depths of a pandemic-fueled sell-off in March 2020.

On Wall Street, the $Dow Jones Industrial Average (.DJI.US)$ fell 0.53%, the $S&P 500 Index (.SPX.US)$ lost 0.79% and the $Nasdaq Composite Index (.IXIC.US)$ dropped 1.66%.

MSCI's gauge of stocks across the globe closed down 1.65%.

The dollar rose more than 1% against a basket of six trading currencies at one point. A key measure of economic expectations, the gap between yields on two- and 10-year Treasury notes, flattened to under 25 basis points.

A closely watched measure of money-market stress and dollar funding conditions rose to its highest level since May 2020, reflecting the increased risk of banks hoarding the U.S. currency and squeezing liquidity.

European bond yields fell along with the euro as investors worried that higher commodity prices will dent growth in the European Union.

The euro fell 1.17% to $1.0934.

Commodity markets headed to their biggest weekly gains in years as the shuttering of Ukrainian ports and sanctions against Russia sent energy, crop and metal buyers scrambling for replacement supplies.

Crude oil, which has hit its highest level in a decade this week, soared again in a volatile session as the disruption of Russian exports outweighed hopes for more Iranian supply if Washington reaches a nuclear deal with Tehran.

U.S. crude futures posted their biggest weekly gain since April 2020, up 25.9%. U.S. crude settled up $8.01 at $115.668 a barrel, while Brent rose $7.65 to $118.11.