Banks led declines in Europe’s Stoxx 600 Index, with Raiffeisen Bank International AG down as much as 18%. U.S. futures also slid, while utilities and defense stocks gained. Oil, natural gas, wheat and palladium jumped, with Brent crude again soaring above $100 a barrel on fears of commodity-supply disruptions.

Rallies in a dollar gauge, gold and Treasuries underlined the demand for havens. The euro fell on worries about risks for Europe’s economy, which relies on Russian energy. An Asia-Pacific equity index ticked up.

The fresh Western penalties further isolate commodity-rich Russia from global finance by seeking to prevent its central bank from using foreign reserves to blunt sanctions. They also exclude some Russian lenders from the SWIFT messaging system that underpins trillions of dollars worth of transactions.

Doubts are now growing about the Bank of Russia’s ability to backstop Russia’s financial system. The nation hiked interest rates to 20% from 9.5%, mandated sales of foreign-currency revenue by exporters and temporarily banned non-residents from selling securities. The ruble fell 8% at the open in Moscow.

There’s speculation that monetary authorities may have to supply markets with dollars to fill holes in global banking created by the SWIFT step. 

The escalating Ukraine conflict and more severe Western sanctions are roiling markets. The hostilities threaten to stoke inflation by imperiling flows of key resources such as grains, energy and metals, exacerbating the pandemic-era price pressures that were already weighing on world growth.

A key question is how all this may affect the Federal Reserve’s plan for a series of interest-rate hikes starting in March. Markets now see smaller chances of an aggressive Fed liftoff, and anticipate just under six hikes in 2022. 

“We’re just a few days into a kind of once-in-a-lifetime reorientation in the global order,” Homin Lee, Asia macro strategist as Lombard Odier, said on Bloomberg Television. “This transition is not going to be a smooth one” and uncertainties will remain very high in the next few weeks, he said.

In Russia, citizens were lining up at cash machines around the country to withdraw foreign currency, fearful of a ruble collapse. Russian bonds were cut to below investment grade by S&P Global Ratings on Friday.

BP Plc’s shares dropped the most in three months after its decision to offload its stake in Rosneft PJSC was given little chance of attracting a buyer. The London-based company already warned that it could take a financial hit of as much as $25 billion from exiting Russia. Norway plans to excise Russian assets from its $1.3 trillion sovereign wealth fund. 

Meanwhile, European defense stocks jumped after Germany said it will increase defense spending in a historic policy shift. Rheinmetall AG surged as much as 49%.

Ukraine’s President Volodymyr Zelenskiy voiced skepticism about talks between Ukrainian and Russian officials at the Belarus border that could get underway within hours. Ukraine said a delegation led by its defense minister had arrived at the border. The Washington Post reported that Belarus is preparing to send troops into Ukraine as soon as Monday to help its ally Moscow. 

The conflict is “likely to boost energy prices significantly, resulting in immediate inflationary effects and a large drag on global growth,” Silvia Dall’Angelo, senior economist at Federated Hermes, wrote in a note. “It’s fair to say that the crisis increases the room for central banks’ policy mistakes.”