Russian President Vladimir Putin speaks during the Valdai Club plenary meeting on November 7, 2024 in Moscow, Russia.
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Global stocks fell and investors fled to safe-haven assets on Tuesday, as global markets reacted to rising tensions between the world’s two biggest nuclear powers: Russia and the US
Pan-European Stoxx 600 The stock index fell by almost 1% at 12:23 pm London time, reaching 498.56 – the lowest level since August. In the US, stock futures tied to the Dow Jones Industrial Average fell 0.5%, S&P futures slid around 0.2%, while Nasdaq 100 futures lost 0.1%.
The drop came after Russian President Vladimir Putin revised Russia’s nuclear doctrine outlining conditions that would lead Moscow to deploy its nuclear arsenal, Russian state news agency Tass reported on Tuesday.
Critically, Russia has now developed the conditions under which it would consider nuclear retaliation to include “the launch of large-scale hostile aircraft, missiles, and drones targeting Russian territory, crossing the Russian border, and attacks on ally Belarus,” Tasya said.
Stoxx 600
The prospect of a potential nuclear escalation propelled investors to the safe-haven market, with gold prices rose 0.8% at 11:52 London time. In the currency market, the If Japan rose 0.7% and 0.36% against the euro and the US dollar respectively at 12:26 London time. The Swiss franc, meanwhile, added 0.3% against the euro.
“The sharp drop in bond yields and USDJPY is certainly noticeable, but I’m even more concerned with how quickly it faded,” Wells Fargo Macro Strategist Erik Nelson told CNBC via email, in reference to the US dollar and Japanese yen exchange.
“There is clearly still a bias to position for higher inflation and strong growth as we enter the final weeks of the year. any decline in yield and USDJPY as long as there are indications of escalation remain more verbal.”
Yen / dollar
While Moscow had signaled its interest in renewing its nuclear doctrine months earlier, the amendment came within days of the US decision to allow Kyiv to use American-made ballistic missiles on Russian territory – a key reversal of Washington’s policy on the war in Ukraine.
“The conflict is escalating … I clearly expect an immediate reaction, a knee-jerk reaction,” Tiffany McGhee, CEO and CIO of Pivotal Advisors, told CNBC’s “Worldwide Exchange.”
He emphasized that it is necessary to review the impact of the market in the long term, but noted the same short-term reaction since the Russian invasion of the neighbor in February 2022.
“But in terms of the long term, this is the third year of the conflict and when we first saw the price increase…
The oil market, which has been most directly affected by the war following Western sanctions on Russian oil supplies, remained in negative territory on Tuesday despite the possibility of a confrontation between the world’s two biggest crude producers.
The Ice Brent contract with January expiration down 0.37% at 12:33 am London time, with the next month December Nymex WTI futures are lower by 0.74%, both compared to Monday’s settlement.
