In the evening, Putin’s decisions drove the price of oil in particular higher. A barrel of Baltic Brent cost around 3.4 percent more in the evening and was quoted at $96.76. The US variety WTI rose 3.6 percent to $94.30.
The renewed tensions also had an impact on the foreign exchange markets: the Russian ruble lost more than three percent in value – the exchange rate for the dollar was 79.37 in the evening. The Russian currency also fell by almost three percent against the euro. The Moscow securities markets also went downhill: the leading index RTS lost more than 13 percent over the course of the day.
German investors had also reacted to the worsening situation with sales: the leading German index, the Dax, closed more than two percent lower – albeit before Putin’s recent announcements. Wall Street is closed for a US holiday.
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On the US futures markets, there were already strong losses on Monday night, which indicated a weak start to trading on Tuesday. The Dow Jones futures fell by 500 points at times, which corresponds to a minus of 1.6 percent. The S&P 500 futures were down nearly 2 percent and the Nasdaq was down 2.7 percent.
Cryptocurrencies also reacted with significant losses. Bitcoin, the largest currency, had been on a wild roller coaster ride before Putin’s announcement – the price fluctuated between just under $39,500 and $37,500 within a few hours. Bitcoin plummeted to just over $36,800 after Russia announced plans to send troops. The other cryptocurrencies also suffered losses. Ethereum temporarily fell below the $2,600 mark.
Asia’s stock markets start with losses
The morning of global stock exchange trading was also marked by losses. Japan’s Nikkei 225 index fell 1.7 percent to 26,443 points in the first ten minutes of trading, while the broader Topix index fell 1.4 percent to 1,884 points.
The losses increased as the day progressed. At 26,328 points, the Nikkei 225 index was 2.2 percent lower than the day before at lunchtime. Many export-oriented electronics groups, which are hit particularly hard by higher prices and a turnaround in interest rates in the USA, lost particularly heavily.
Sony lost 2.6 percent in value by the lunch break. The course of the chip plant manufacturer Tokyo Electron even dropped by more than four percent to 52,610 yen, that of Kyocera, a leading manufacturer of electronic components, by 3.5 percent to 6,615 yen.
Asia strategists at US bank Morgan Stanley believe this trend could continue. “In our view, the ‘rate shock’ remains the dominant theme.” The market may be beginning to adjust to the risk of an economic slowdown. As long as bond market volatility persists, strategists expect pressure on highly valued companies, most notably technology stocks.
Pessimism also spread in other markets in the region. Australia’s S&P/ASX200 index, which briefly rose above Monday’s close, fell 1.3 percent to 7138 points as of 1:35 p.m. local time.
South Korea’s Kospi index, which had closed almost unchanged the day before, was also 1.5 percent below the previous day at the time. Even China’s and Singapore’s stocks couldn’t escape the pull. Hong Kong’s Hangseng Index was down 2.3 percent as of 10:25 a.m. local time, the Shanghai Composite Index was down 1.1 percent and Singapore’s Straits Times Index was down 0.7 percent.
But the otherwise sensitive foreign exchange market reacted more calmly to the escalation in the Ukraine conflict. The Japanese yen, which currency traders like to use as a safe investment during crises, rose only 0.2 percent against the dollar to 114.66 yen by the Japanese lunch break.
As Masahiro Ichikawa of Sumitomo Mitsui DS Asset Management explained in the Japanese business daily Nikkei, “the deployment of troops was expected at the time independence was recognized.” This has limited market reactions to Putin’s order to deploy troops.
More: You can read all the news about the Ukraine crisis in the news blog.
With agency material.