Global stocks fell Monday, with US futures ending lower. Meanwhile, oil and gold saw significant buying pressure as investors flocked to safe-haven assets.
The declines in stock markets followed what seems to be a clear escalation of the Russia-Ukraine crisis. This is after Russia’s President Vladimir Putin recognised two separatist regions of Ukraine.
The US reacted with a statement promising sanctions against the two regions, in addition to any imposed on Russia in case of an invasion.
Markets tumbled Monday
While US markets were closed on Monday for a prolonged weekend holiday, the futures markets fell to signal the jitters among investors.
The S&P 500 futures fell nearly 1.3% as the Nasdaq 100 shed 1.9%. Meanwhile, the Dow Jones Industrial Average futures slipped almost 600 points or about 1%.
Earlier, the pan-European Stoxx 600 index closed 1.3% down, while markets in France and Germany tumbled by more than 2% respectively. UK’s FTSE 100 fell 0.4%.
The worst decline on the day was observed on Russia’s benchmark index MOEX, which fell 10.5% to record its biggest single-day rout since March 2014. Incidentally, that performance happened when Russia invaded and annexed Crimea.
US reacts to Putin’s recognition of separatist regions
The US warned Monday that Russia was still very likely to invade Ukraine. The same day, Putin recognised the self-proclaimed independent regions of Donetsk and Luhansk, seemingly escalating the threat of war.
The White House released a statement noting that the US was ready to sanction ‘Donetsk People’s Republic’ and ‘Luhansk People’s Republic.’
“To be clear: these measures are separate from and would be in addition to the swift and severe economic measures we have been preparing in coordination with allies and partners should Russia further invade Ukraine,” CNBC quoted the White House statement.
But earlier, Putin, speaking in a televised address, brushed aside any potential sanctions. He vowed that Russia was ready to defend its territory at all costs.
Asian markets have opened mixed on Tuesday morning, with China’s Shanghai Composite, Japan’s Nikkei 225, and Australia’s ASX 200 just above the flatline. Elsewhere, Hong Kong’s Hang Seng was down 0.7% while Thailand’s SETI had shed 1.1%.
Oil and gold surge
Across the markets, oil and gold prices have jumped amid geopolitical tensions. Brent crude rose 3.45% to $96.84. Notably, Russia is one of the world’s largest oil suppliers, with exports to most of Europe.
Gold prices continued to benefit from investors’ flight into safe-haven assets. Last week’s rally to an 8-month high was tempered by a subsequent dip as risk-on appetite appeared to resurface.
However, with the fluid Russia/Ukraine crisis reigniting risk-off sentiment, the precious metal reached highs of $1,910 per ounce. The last time gold traded near these levels was in January last year.
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