Stocks drop, oil rises as Putin warns on Ukraine

A man wearing a protective mask, amid the outbreak of the coronavirus disease (COVID-19), walks through an electronic board showing Japan’s Nikkei index and prices of stock market indices in different countries outside a brokerage in Tokyo, Japan, February 22, 2022. REUTERS/Kim Kyung-Hoon

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  • MSCI Asia excluding Japan fell more than 2.5%; S&P e-minis are down 2%.
  • Putin holds responsibility for any bloodshed in Ukraine
  • Gold is the highest since January 2021, oil approaches $100
  • Civilian flights banned in Ukraine -NOTAM

SHANGHAI (Reuters) – Global stocks and US bond yields fell on Thursday, while the dollar, gold and oil prices rose sharply after Russian President Vladimir Putin issued a strong warning against Ukraine and authorized special military operations in Ukraine’s Donbas region.

A Reuters witness, shortly after Russia announced the military operation, reported hearing several explosions in the Ukrainian capital, Kiev, before dawn, after an initial series of sounds resembling artillery fire.

Putin called on Ukrainian soldiers to lay down their weapons immediately and return home, and said that responsibility for any bloodshed would be on the conscience of the “Ukrainian regime”, according to statements carried by Russian news agencies. Read more

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The comments exacerbated an already bleak sell-off in Asian trade, pushing MSCI’s broader index of Asia Pacific shares out of Japan. (MIAPJ0000PUS.) Down more than 3%, with Australian shares (.AXJO) From more than 3% and excellent Chinese chips (.CSI300) down 1.3%.

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Nikkei in Tokyo (.N225) It was 2.4% lower. US stock market futures also fell sharply, with the S&P 500 e-minis down 2% and the Nasdaq down 2.5%.

“The market view of Russia is now going to do whatever it wants given how weak the sanctions are, pricing the invasion,” said Ray Atrell, head of FX strategy at National Australia Bank.

“The real concern is that Europe is cut off from Russian gas. The EU cannot deal with such a supply shock and will have to rein in demand, which will be economically exhausted,” he added. “Rising energy prices is also where rubber hits the road in terms of global economic growth, this should be bad for risk sentiment.”

As one of Europe’s worst post-Cold War security crises deepened in decades, US Secretary of State Anthony Blinken said he believed Russia would invade Ukraine within hours after separatists on Wednesday called for Moscow’s help to fend off “aggression” and as explosions rocked Donetsk. Eastern separatist. Read more

Asset markets have seen a sharp increase in volatility during the deepening crisis, with oil prices soaring close to $100 a barrel, and the Cboe volatility index, known as Wall Street’s fear gauge, up more than 55% over the past nine days. (.VIX)

Brent crude futures, which swung between sharp highs and lows on Wednesday, resumed their rally towards $100 a barrel on Thursday, adding 1.22% to $97.98. West Texas Intermediate rose 1.32% to $93.32 a barrel.

The spot gold price jumped more than 1.2 percent to $130.86, its highest level since early January 2021.

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Putin’s comments blasting US stocks took a hit, with the Dow Jones Industrial Average (.DJI) It fell 1.38% to just above the level that would have confirmed the correction. MSCI World Index (.MIWD00000PUS)the leading gauge of stock markets globally, to its lowest level since April 2021.

Investors are also grappling with the prospect of an imminent policy tightening by the US Federal Reserve aimed at combating rising inflation, which NAB analysts say could be exacerbated by the commodity supply shock.

While expectations for a sharp 50 basis point hike at the Fed’s March meeting have cooled, Fed fund futures continue to point to at least six rate hikes this year. FEDWATCH

Despite this, immediate geopolitical threats weighed on US yields on Thursday, pushing the US 10-year benchmark yield sharply down to 1.9165% from its US close of 1.977% on Wednesday. The two-year yield also fell to 1.5358% from a close of 1.6%.

The global flight to safety boosted the dollar, as it jumped 0.267 against a basket of other major trading partners to 96,444.

The euro was down 0.38% on the day at $1.1266.

The Russian ruble fell, falling 0.3% against the dollar after falling more than 3% on Wednesday.

Selling spread across the cryptocurrency markets, sending bitcoin below $36,000 and to a one-month low of $3,5197.44.

“Markets are now pricing more appropriately at the risk of something horrible happening. That combined with uncertainty is a horrible environment to live in. Nobody wants to take risk when it’s trading,” said Rob Carnell, head of Asia Pacific research at ING. .

Additional reporting by Andrew Galbraith in Shanghai; Additional reporting by Sinead Caro in New York, Elon John in Hong Kong and Wayne Cole in Sydney. Editing by Shree Navaratnam and Kim Koogill

Our criteria: Thomson Reuters Trust Principles.

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