News of heightened geopolitical tensions in Ukraine hurt global equities on Monday’s trading, as the increased possibility of a full-scale war weighed on risk sentiment. Over the weekend, Russian President Putin commanded the mobilization of military troops to take over Ukraine. This has been met with criticism from the interim leadership in Ukraine, as well as leaders in Europe and the United States.
As expected, Russia’s equity market opened lower on Monday, as the central bank scrambled to hike interest rates to preempt sudden inflationary spikes and financial instability. U.S. equity indices are expected to open lower for the day, as U.S. stock futures are already under heavy selling pressure, with S&P500 futures down by 13.9 points and DJIA futures slipping by 103 points.
Global Equities Performance
Most major equity indices chalked up close to 2% declines for the day, as Japan’s Nikkei ended with a 1.72% loss in the Tokyo trading session. The MSCI Asia-Pacific index excluding Japanese stocks chalked up a 0.9% decline.
Germany’s DAX was also hard hit, as the index slipped by 3.1% in today’s London session. This marks the index’s steepest daily fall in the past eight months.
Global equities with direct ties to either Russia or Ukraine or both suffered large losses for the day, as the threat of an actual war in the area could disrupt production and sales. Market analysts are projecting further declines in the coming days as the political situation doesn’t show any promise of improvement in the near term.
Gold benefitted from this flight to safety, as traders moved their funds away from higher-yielding global equities to precious metals and lower-yielding currencies like the U.S. dollar and the Japanese yen. Oil prices also surged, as Putin threatened to restrict gas supplies and sparked fears of a decline in oil stockpiles if a war ensues.
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