Shanghai (WNews) – U.S. bond yields and global stocks tumbled on Thursday, while gold, oil and the dollar surged after Russian troops landed in Ukrainian cities on the Black Sea and Ukraine reported a full-scale invasion.
According to Russian news agencies, Russian troops landed in the Ukrainian Black Sea port of Odessa and in Mariupol in the eastern region of Donetsk.
During the same period, the Ukrainian military command centers located in the cities of Kyiv and Kharkiv came under fire from missiles, according to the Ukrainska Pravda news website quoting a senior official of the Ukrainian interior ministry.
In the wake of the latest attacks, Russian President Vladimir Putin has issued a blistering warning to the West. It has been reported that Russian President Vladimir Putin called on Ukrainian soldiers to lay down their weapons and go home immediately, saying the responsibility for any bloodshed would be on the conscience of “the Ukrainian regime”, according to Russian news agencies.
Additionally, Putin has authorized special military operations in Ukraine’s Donbass region.
Videos posted online shortly after Russia announced the military operation indicate that multiple explosions were heard in the Ukrainian capital, Kyiv, before dawn, following an initial series of sounds similar to artillery fire.
The comments worsened an already grim selloff in Asian trade, pushing MSCI’s broadest index of Asia-Pacific shares outside Japan down more than 3.2%, with Australian shares off more than 3% and Chinese blue chips down 1.3%.
Tokyo’s Nikkei was 2.4% lower. U.S. stock market futures were also down sharply, with S&P 500 e-minis down 2.3% and Nasdaq futures 2.8% weaker.
Asset markets have seen a sharp increase in volatility over the deepening crisis, with the Cboe Volatility Index, known as Wall Street’s fear gauge, up more than 55% over the past nine days. (.VIX)
Brent crude futures surged more than 3.5% on Thursday, shooting beyond $100 a barrel for the first time since September 2014. On Wednesday, Brent crude futures fluctuated sharply between lows and highs. West Texas Intermediate leaped 4.6% to $96.22 per barrel, their highest since August 2014.
This is the highest level since early January 2021 that spot gold has hit with a gain of more than 1.7%.
The deepening selloff in equities came after U.S. stocks already took a beating on Wednesday, with the Dow Jones Industrial Average down 1.38% to barely above the level that would have confirmed a correction. The MSCI World Index, a leading gauge of equity markets globally, skidded to its lowest level since April 2021.
Investors have also been grappling with the prospect of imminent policy tightening by the U.S. Federal Reserve aimed at combating surging inflation, which NAB analysts say could be exacerbated by a commodities supply shock.
While expectations of an aggressive 50-basis-point hike at the Fed’s March meeting have eased, Fed funds futures continue to point to at least six rate hikes this year.
All the same, immediate geopolitical threats weighed on U.S. yields on Thursday, pushing the benchmark U.S. 10-year yield down sharply to 1.8681% from its U.S. close of 1.977% on Wednesday. The 2-year yield also fell, to 1.5% from a close of 1.6%.
The global flight to safety boosted the dollar, which jumped more than half a percent against a basket of other major trading partners to 96.715.
The euro was down 0.8% on the day at $1.1220.
The Russian rouble turned violently lower after posting small gains early in the session. It was last down nearly 4% on top of a 3% slump against the dollar on Wednesday.
The sell-off spread to cryptocurrency markets, pushing bitcoin below $35,000 for the first time in a month.
“Markets are now more adequately pricing in the risk of something horrific happening. That combined with the uncertainty is a horrible environment to be in. No one wants risk exposure when that’s floating around,” said Rob Carnell, head of Asia Pacific research at ING.
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