A gauge of global stocks fell and government debt prices rose on Friday after hopes that diplomacy might resolve the Ukraine crisis faded on news Russian-backed separatists were evacuating residents from breakaway regions in the country’s east.
Futures on the Dow Jones fell 0.4%, and the S&P 500 fell 0.6%, while those on the Nasdaq lost 1.1% as of 9:40 a.m. ET. The major US stock markets are closed Monday for the Presidents Day holiday.
Ukraine dismissed Russia’s statement, saying not a single one of its soldiers had been killed and none had entered Russian territory on Monday morning. US officials have previously described Russia’s reports of military incursions by Ukraine as “false flags” to create an excuse for it to invade its neighbor.
Dollar Index
The dollar rebounded and the safe-haven Swiss franc rose as a mood that had improved on news late on Thursday that U.S. Secretary of State Antony Blinken would meet with Russian Foreign Minister Sergei Lavrov next week darkened again.
The dollar index, a measure of the greenback to six major trading currencies, rose 0.301%, while the euro against the franc fell 0.19%. The two currencies often are recipients of a flight to safety during times of crisis.
But the uncertainty surrounding the situation, as Ukrainian forces and Russian-backed separatists, traded fire in eastern Ukraine. They added to investor worries, prompting the sell-off to accelerate in late afternoon trade.
Oil futures fell more than 2%, and US officials held discussions with Saudi Arabia about a “collaborative approach” to managing potential market pressures stemming from a possible Russian invasion of Ukraine, the White House said.
The consumer staples sector was one of the few exempt from the declines, lifted by Walmart. The discount giant rose 4% after it reported strong holiday sales. The executives said they expected more shoppers to turn to it as concerns about the rising cost of living increase. Meanwhile, some assets considered less risky gained, with gold rising to an eight-month high.
Asian Market
Indian equity gauges Sensex and Nifty logged their fourth straight session of losses on Monday as participants remained cautious over lingering geopolitical tensions in Ukraine. The Sensex had settled 150 points lower at 57,683 while the broader NSE Nifty slipped 69.65 points to 17,206.
“After Russian President Vladimir Putin recognizes two breakaway regions of eastern Ukraine. The stock market investors are advised to remain vigilant about further developments because there are chances of reciprocal action by the US and its allied countries.
They also need to keep an eye on the shorter range of SGX Nifty, which is 16,800 to 17,380. SGX Nifty breaching its 16,800 support would mean further weakness in the Indian stock market,” said Anuj Gupta, Vice President at IIFL Securities.
Among the Asian markets, Japan’s Nikkei and Hong Kong’s Hang Seng index were today down over 2% each. US futures also indicated a sharp cut. S&P 500 futures fell 1.5% and Nasdaq futures fell 2.2%.
“Mirroring the fall in SGX Nifty, key benchmark indices are seen trading in rough waters amid Russia-Ukraine tensions. The Fed’s hawkishness is still reverberating negative sentiments.
Overnight, MOEX Russia Index slumped as much as 14% after Russian President Vladimir Putin said he’s considering an appeal for official recognition from separatists in east Ukraine. Amidst this backdrop, Nifty’s resistance is at 17421 mark and expect waterfall of selling below 17057 mark,” said Prashanth Tapse, Vice President (Research), Mehta Equities Ltd.
