(Bloomberg) — Stocks tumbled, with European equities down nearly 1%, and global bonds rising on worries about the latest escalation in Russia’s war against Ukraine.
Most Read from Bloomberg
S&P 500 futures were down 0.3%. The yield on 10-year Treasuries fell four basis points to 4.37%. The move was steeper in Europe, with German bond yields falling to their lowest since October. The euro retreated 0.3%. Poland’s main stock index fell more than 3%.
Markets were rattled by reports that Ukrainian forces reportedly carried out the first attack in the border area of ​​Russia using Western-provided missiles. Earlier, President Vladimir Putin has approved an updated nuclear doctrine that expands the requirements for Russia to use atomic weapons, including in response to massive conventional strikes on the ground. Putin had promised in September to change the doctrine.
“The market reaction is logical, one could feel yesterday that the tension was rising,” said Andrea Tueni, head of sales trading at Saxo Banque France. “Right now the market reaction is there, some are still in wait and see mode.”
Why the US Will Let Ukraine Hit Russia With Missiles: QuickTake
Traditional haven assets include Japanese yen, Swiss francs and acquired gold. Ukraine’s sovereign dollar bonds fell the most among emerging markets, with notes due in February 2029 losing 1.6 cents on the dollar.
In commodities, natural gas futures gained 1.1%, trading near their highest level in a year. Gold rose 0.9% at $2,635 an ounce. Oil traders, meanwhile, appeared unfazed by the latest developments, with prices falling after Europe’s biggest oil field restarted after a power outage.
Trump Picks
Also on Tuesday, traders discussed how Trump’s nominee for Treasury secretary could shape policy. The transition team is considering pairing Kevin Warsh, a former Federal Reserve official, in the role of Treasury secretary, with hedge fund manager Scott Bessent as director of the White House National Economic Council, according to people familiar with the matter.
“Kevin Warsh is on the FOMC, so the possibility of political interference into the Fed’s policymaking will certainly decrease if he becomes Treasury secretary,” said Gero Jung, chief economist at Mirabaud Asset Management in Geneva.
