Stocks Fall as Russia-Ukraine War Rattles Traders: Markets Wrap

(Bloomberg) — Stocks slumped, with European equities shedding almost 1%, and global bonds climbed on worries over the latest escalation in Russia’s war against Ukraine. 

S&P 500 futures dipped 0.4%. The yield on 10-year Treasuries fell five basis points to 4.36%. The moves were steeper in Europe, with German bond yields dropping to the lowest since October. The euro retreated 0.3%. Poland’s main stock index sank 2.5%.

Markets were rattled by a report that Ukrainian forces reportedly carried out their first strike on a border region in Russia using Western-supplied missiles. Earlier, President Vladimir Putin approved an updated nuclear doctrine that expands the conditions for Russia to use atomic weapons, including in response to a massive conventional attack on its soil. Putin had pledged in September to revise the doctrine.

“The market reaction is logical, one could feel already yesterday that the tension, was rising,” said Andrea Tueni, head of sales trading at Saxo Banque France. “For the moment the market reaction is contained, some are still in a wait-and see-mode.”

Traditional haven assets including the Japanese yen, Swiss franc and gold gained. Ukraine’s sovereign dollar bonds fell the most among emerging-market peers, with a note due February 2029 losing 1.6 cent on the dollar. 

In commodities, natural-gas futures gained as much as 1.1%, trading near their highest levels in a year. Gold was up 0.9% at $2,635 an ounce. Oil traders, meanwhile, appeared unfazed by the latest developments, with prices falling after Europe’s largest oil field gradually restarted following a power outage. 

Trump Picks

Also on Tuesday, traders were discussing how Trump’s nomination of Treasury secretary could shape policy. The transition team is considering pairing Kevin Warsh, a former Federal Reserve official, in the Treasury secretary role, with hedge fund manager Scott Bessent as director of the White House’s National Economic Council, according to people familiar with the matter.

“A more measured and experienced team in financial leadership positions in the US government will be positive for investor confidence,” said Rajeev De Mello, a global macro portfolio manager at Gama Asset Management. 

Meanwhile, Bitcoin is back in the vicinity of an all-time high, climbing above $91,000. The digital asset has been 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. Nasdaq Inc.’s is planning to list options on the $43 billion iShares Bitcoin Trust as early as Tuesday. 

Key events this week:

• Eurozone CPI, Tuesday
• US housing starts, Tuesday
• Fed’s Jeff Schmid speaks, Tuesday
• China loan prime rates, Wednesday
• Nvidia earnings, Wednesday
• Fed’s Lisa Cook and Michelle Bowman speak, Wednesday
• Eurozone consumer confidence, Thursday
• US existing home sales, initial jobless claims, Philadelphia Fed factory index, Thursday
• Eurozone HCOB Manufacturing & Services PMI, Friday
• US University of Michigan consumer sentiment, S&P Global Manufacturing & Services PMI, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.4% as of 6:13 a.m. New York time
• Nasdaq 100 futures fell 0.3%
• Futures on the Dow Jones Industrial Average fell 0.6%
• The Stoxx Europe 600 fell 0.9%
• The MSCI World Index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro fell 0.4% to $1.0559
• The British pound fell 0.3% to $1.2638
• The Japanese yen rose 0.5% to 153.81 per dollar

Cryptocurrencies

• Bitcoin rose 0.4% to $91,756.14
• Ether fell 0.6% to $3,130.59

Bonds

• The yield on 10-year Treasuries declined five basis points to 4.37%
• Germany’s 10-year yield declined six basis points to 2.31%
• Britain’s 10-year yield declined four basis points to 4.42%

Commodities

• West Texas Intermediate crude fell 0.6% to $68.72 a barrel
• Spot gold rose 0.9% to $2,634.71 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Jason Scott, Alex Gabriel Simon, Julien Ponthus and Aya Wagatsuma.

©2024 Bloomberg L.P.