© Reuters.FILE PHOTO: A man wearing a protective mask walks past electronic displays showing prices of Japan’s Nikkei and national stock indexes during the coronavirus disease (COVID-19) outbreak in front of a brokerage firm in Tokyo, Japan, on February 22. plate
SHANGHAI (Reuters) – Dollar, gold and oil prices surged, global stocks and U.S. bond yields surged after Russian President Vladimir Putin issued a stern warning to Ukraine and authorized a special military operation in Ukraine’s Donbas region. plummeted on Thursday.
Several explosions were heard before dawn in the Ukrainian capital Kiev after the first round of similar artillery fire, shortly after Russia announced the military action, a Reuters witness said.
Putin called on Ukrainian soldiers to immediately lay down their weapons and return home, according to the Russian news agency, saying the responsibility for any bloodshed rested with the conscience of the “Ukrainian regime”.
The remarks added to an already dismal sell-off in Asian trading, sending MSCI’s broadest index of Asia-Pacific shares outside Japan down more than 3 percent, Australian shares down more than 3 percent and Chinese blue chips down 1.3 percent.
Tokyo stocks fell 2.4 percent. U.S. stock futures also fell sharply, down 2%, and Nasdaq futures fell 2.5%.
“The market believes that Russia will now do whatever it wants given the weak sanctions and is considering an invasion,” said Ray Attrill, head of foreign exchange strategy at National Australia Bank (OTC: ).
“The real concern is that Europe is cut off from Russian gas. The EU cannot cope with such a supply shock and will have to dampen demand, which will weaken the economy,” he added. “Rising energy prices are also key to global growth, which is certainly not good for risk sentiment.” »
As one of Europe’s worst post-Cold War security crises in decades worsens, U.S. Secretary of State Anthony Blinken has said he believes Russia will invade Ukraine within hours. The separatist eastern city of Donetsk.
Volatility in asset markets has risen sharply during the deepening crisis, with oil hitting nearly $100 a barrel and the CBOE Volatility Index, known as Wall Street’s fear gauge, up more than 55% in the past nine days.
Futures, which fluctuated between strong gains and losses on Wednesday, resumed gains to $100 a barrel on Thursday, rising 1.22% to $97.98. West Texas Intermediate crude rose 1.32% to $93.32 a barrel. [O/R]
It rose more than 1.2% to $1,930.86, its highest level since early January 2021. [GOL/]
Putin’s remarks ripped through U.S. stocks, down 1.38%, just above confirming a correction. A leading indicator of global equities, fell to its lowest level since April 2021.
Investors are also grappling with the prospect of an imminent Fed tightening to combat soaring inflation, with NAB analysts saying a shock to U.S. raw material supplies could fuel inflation.
Fed funds futures continue to point to at least six rate hikes this year, even as expectations for a sharp 50 basis point rate hike at the Fed’s March meeting have eased. [FEDWATCH]
Still, immediate geopolitical threats weighed on U.S. yields on Thursday, pushing the benchmark 10-year U.S. Treasury yield down sharply to 1.9165% from Wednesday’s U.S. close of 1.977%. The two-year Treasury yield also fell to 1.5358% from the close of 1.6%.
The global safe-haven boosted the dollar, which rose 0.267 to 96.444 against a basket of other major trading partners.
The euro was down 0.38% on the day at $1.1266.
The Russian ruble fell 0.3% against the dollar after falling more than 3% on Wednesday.
The sell-off spread to the cryptocurrency market, pushing bitcoin below $36,000 and to a one-month low of $35,197.44.
“The market is now pricing in the risk of something terrible happening more accurately. Add to that uncertainty and it’s a scary environment. No one wants to take risks when it floats,” said Rob Carnell, head of research for Asia Pacific at ING.