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

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

S&P 500 futures dipped 0.5%. The yield on 10-year Treasuries fell seven basis points to 4.34%. The moves were steeper in Europe, with German bond yields dropping to the lowest since October. The euro retreated 0.5%. Poland’s main stock index sank 2.6%.

Markets were rattled by news that President Vladimir Putin is pushing ahead with a nuclear doctrine that allows Russia to expand use of atomic weapons — an announcement that comes just days after the US gave Ukraine limited permission for long-range missile strikes on Russian territory. A report from RBC-Ukraine said the first such strike has taken place.  

“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. 

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. And 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

• The Stoxx Europe 600 fell 0.9% as of 10 a.m. London time
• S&P 500 futures fell 0.5%
• Nasdaq 100 futures fell 0.4%
• Futures on the Dow Jones Industrial Average fell 0.7%
• The MSCI Asia Pacific Index rose 0.9%
• The MSCI Emerging Markets Index rose 0.4%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%
• The euro fell 0.5% to $1.0546
• The Japanese yen rose 0.6% to 153.76 per dollar
• The offshore yuan fell 0.2% to 7.2430 per dollar
• The British pound fell 0.4% to $1.2626

Cryptocurrencies

• Bitcoin rose 0.5% to $91,807.23
• Ether fell 1.2% to $3,113.88

Bonds

• The yield on 10-year Treasuries declined five basis points to 4.36%
• Germany’s 10-year yield declined seven basis points to 2.30%
• Britain’s 10-year yield declined six basis points to 4.40%

Commodities

• Brent crude fell 0.4% to $73.02 a barrel
• Spot gold rose 0.7% to $2,630.63 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.