Global Markets React to Escalating Tensions in Ukraine
As the conflict between Russia and Ukraine intensifies, global markets are feeling the strain. European equities plummeted by 1%, while bonds surged as investors sought safe-haven assets. The yield on 10-year Treasuries dropped by seven basis points to 4.34%, with German bond yields falling to their lowest level since October.
Russia’s Nuclear Doctrine Sparks Concern
The catalyst for the market downturn was President Vladimir Putin’s announcement that Russia would expand its use of atomic weapons. This move comes just days after the US granted Ukraine permission for limited long-range missile strikes on Russian territory. According to reports, the first such strike has already taken place.
Investors Take a Cautious Approach
Andrea Tueni, head of sales trading at Saxo Banque France, noted that the market reaction was logical, given the rising tension in the region. While some investors are taking a wait-and-see approach, traditional haven assets like the Japanese yen, Swiss franc, and gold are gaining traction.
Ukraine’s Sovereign Dollar Bonds Take a Hit
Ukraine’s sovereign dollar bonds fell the most among emerging-market peers, with a note due in February 2029 losing 1.6 cents on the dollar. This decline is a clear indication of the market’s concerns about the escalating conflict.
Trump’s Treasury Secretary Pick Could Impact Policy
Meanwhile, traders are discussing the potential impact of Trump’s nomination of Treasury secretary on policy. The transition team is considering pairing Kevin Warsh, a former Federal Reserve official, with hedge fund manager Scott Bessent as director of the White House’s National Economic Council.
Bitcoin Surges Amid Trump’s Digital-Asset Embrace
In other news, Bitcoin has climbed above $91,000, supported by a series of developments highlighting the deepening embrace of the digital-asset industry by Trump. Trump Media & Technology Group Corp. is in talks to buy digital-asset marketplace Bakkt Holdings Inc., and Nasdaq Inc. is planning to list options on the $43 billion iShares Bitcoin Trust.
Key Events This Week
Investors will be keeping a close eye on several key events this week, including Eurozone CPI, US housing starts, and Fed speeches. Additionally, Nvidia earnings, China loan prime rates, and US existing home sales will be closely watched.
Market Moves
Here’s a snapshot of the market moves:
- Stocks: Stoxx Europe 600 fell 0.9%, S&P 500 futures fell 0.5%, Nasdaq 100 futures fell 0.4%
- Currencies: Bloomberg Dollar Spot Index rose 0.1%, euro fell 0.5% to $1.0546, Japanese yen rose 0.6% to 153.76 per dollar
- Cryptocurrencies: Bitcoin rose 0.5% to $91,807.23, Ether fell 1.2% to $3,113.88
- Bonds: Yield on 10-year Treasuries declined five basis points to 4.36%, Germany’s 10-year yield declined seven basis points to 2.30%
- Commodities: Brent crude fell 0.4% to $73.02 a barrel, spot gold rose 0.7% to $2,630.63 an ounce
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