A Downturn in Global Markets Due to Geopolitical Tensions.
London, Tuesday, 22 February 2022 -
While selling pressure in global stock markets has escalated since Russia recognized Ukraine's breakaway regions of Donetsk and Luhansk, Tuesday's pricing is expected to be influenced by the ongoing Russia-Ukraine crisis and the heightened data calendar.
President Vladimir Putin of Russia signed a proclamation on Monday recognizing pro-Russian breakaway areas in eastern Ukraine.
The United States slammed Moscow's action, prohibiting investment, trade, and financing to and from the self-proclaimed People's Republics of Donetsk and Luhansk.
The United Nations Security Council convened an emergency meeting Wednesday night, saying the Russia-Ukraine crisis had reached a perilous stage and that developments that could lead to a major confrontation should be avoided at all costs.
President Volodymyr Zelensky of Ukraine said Russia is responsible for the consequences of its actions, while Turkey called the measure "unacceptable."
While commodities prices, particularly wheat, oil, and gold, have risen as a result of rising geopolitical threats following recent events, Asian stock markets, as well as US and European index futures, have fallen sharply.
With $95.1 per barrel, Brent oil reached its highest level in a week, while gold hit an eight-month high of $1,914 per ounce.
After touching its lowest level since November 2020, Russia's RTS index closed Monday at 1,207.5 points, down 13.2 percent.
The parity between the US dollar and the Russian ruble fell to 79.9 after reaching an all-time high of 80.5 in 15 months.
As a result of these developments, the new day began with a drop of about 2% in US index futures contracts on the New York stock market, which were not traded on Monday owing to the federal holiday.
The US dollar index slipped 0.2 percent to 96.2, while the US 10-year bond yield fell to 1.86 percent, continuing a trend that had been in place for about a week.
Concerns about prospective sanctions by Western countries against Russia and the implications of a new decrease in energy supply on economies are factored in the financial markets as political remarks stream in amid rising geopolitical dangers in Europe.
The FTSE 100 index down 0.39 percent in the United Kingdom, the DAX 30 index fell 2.07% in Germany, and the CAC 40 index fell 2.04% in France, while index futures contracts lost an average of 2% on the new trading day.
The euro/dollar exchange rate is about 1.13 on Tuesday, after being flat on Monday.
On the Asian front, the new day began with a sales-weighted track, with negative signs on all indices.
According to analysts, global risk appetite has decreased due to growing fears about whether the Russia-Ukraine issue could escalate into a military conflict, and individual investors should avoid panic and remain calm during this period of projected volatility.
(Reporting by: The Decision Maker – Banking & Finance editors)