US futures fall as Ukraine conflict and Federal Reserve worry investors, while oil prices tumble another 5%

• US futures fell Tuesday as investors weighed the Russia-Ukraine conflict and Federal Reserve policy.
• Oil also tumbled, continuing its recent decline as coronavirus cases in China clouded the demand outlook.

US futures fell on Tuesday as the Russia-Ukraine conflict clouded the global outlook and investors braced for the Federal Reserve to start raising interest rates, while oil prices continued to slide.

$4 were 0.33% lower at 6.16 a.m. ET, after the benchmark stock index fell 0.74% Monday.

$4 were 0.19% lower, after the index closed in a so-called bear market — a drop of 20% or more from recent highs — the previous day. $4 were 0.38% lower.

European stocks slid as investors weighed up the risks of the Ukraine war to the area's economy. The continent-wide $4 index was 1.49% lower in early trading.

In China, worries about rising coronavirus cases in China and potential US sanctions sent stocks crashing. The country's $4 index tumbled 4.57% overnight, down almost 20% this year. Tokyo's $4 gained 0.15%, however.

The drop in stocks came as oil fell for a second day, reflecting investor concern about the potential hit to global energy demand, even though lower prices also theoretically would alleviate some inflationary pressures.

$4 was down 5.8% to $100.78 a barrel, while $4 was 5.88% lower at $96.98 a barrel. The falls came as talks between Russia and Ukraine continued, and as China's rising COVID cases caused investors to scale back on their expectations of future demand.

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However, investors found little solace in falling oil prices. A whole range of factors, including central bank policy and the biggest COVID outbreak in China since the start of the pandemic, were worrying traders, analysts said.

"Markets were again unable to sustain gains as the cocktail of concerns was extended, with China being added to the list," said Richard Hunter, head of markets at trading platform Interactive Investor.

The Federal Reserve's Open Markets Committee (FOMC) is set to announce its latest interest rate decision Wednesday, with most analysts expecting a 25-basis point increase in the main rate from its current record low level of between zero and 0.25%.

Strategists will be looking closely at the so-called dot plot, which lays out Fed official's expectations for the future path of interest rates.

"We expect the median dots to show 5 hikes in 2022 (3 previously), 4 hikes in 2023 (3 previously), and 1 hike in 2024 (2 previously)," Bank of America analysts said in a note to clients Monday, updating its predictions.

"Fed communication has pivoted hawkishly in the new year, with an acknowledgement that the Fed needs to get serious on inflation and normalize policy quickly," they said.

Bond yields have shot up over the last week, having fallen sharply when Russia invaded Ukraine in February, as investors have dialed up their expectations for Fed hikes in 2022.

The yield on the key $4 slipped back 3.5 basis points Tuesday to 2.109%, but was nonetheless hovering around its highest level since the middle of 2019. Bond yields move inversely to prices.