Asia markets are set to open lower as both EU and US stocks gave up gains and closed at session lows overnight. US President Joe Biden imposed further sanctions on Russia, while Ukraine declared a nationwide state of emergency.
SPI futures are indicating a 1.3% drop on the S&P/ASX 200 when it opens and the NZX 50 dipped 0.3% in the first half an hour of trading.
US and EU stocks
The broader markets fell for the fifth consecutive day on the intensifying geopolitical tension, with the CBOE Volatility Index spiking to above the 30-mark. The US President imposed further sanctions on Russian by targeting the crucial building of the Nord Stream 2 gas pipeline, which is a key supply source to the European countries.
All of the major EU stock markets gave up early gains and finished lower, with DAX down 0.42%, Euro Stoxx 50 falling 0.30%, and CAC 40 sliding 0.1%.
In the US markets, the Dow Jones Industrial Average fell 1.38%, the S&P 500 slid 1.84%, and Nasdaq slumped 2.57%.
While the S&P 500 dipped further into correction territory, growth stocks led broad markets losses, with consumer discretionary and technology sectors falling 2.93% and 2.14% respectively. Teslas Motor wiped 7% off its market value. The EV maker’s share price dropped to a 4-month low at $US764. Nvidia fell 4%, and Advanced Micro Devices declined 5.1%. The mega-cap companies were all down by between 1% and 4%, with Apple down 2.55% and Amazon dropping 3.55%. And the LYXOR MSCI Russia ETF slipped 4.44%.
Energy stocks outperformed, up 1% due to supply worries amid Russia-Ukraine tension. Occidental was up 0.93%, and Chevron rose 2.37%.
At the same time, the odds of a 50-basis-points rate hike in March by the Fed dropped to 63.4% from above 80% two days ago, according to the CME Fed Watch Tool. The Fed’s aggressive move towards tightening monetary policy appears to be weakening due to the boiling US-Russia tension over Ukraine.
The 10-year US Treasury yield rose to 1.979% from 1.934% a day earlier, while the 2-year Treasury yield up to 1.596% from 1.56%.
Euro Zone government bonds yields mostly fell, sparked by risk-off sentiment. Germany 10-year Bond Yield fell to 0.219%, and the France 10-year Bond Yield slid to 0.728%.
Gold futures were up $US8 to $US1,910 per ounce, testing the key resistance.
WTI futures were flat at $US91.9. The oil price swung as investors weigh the impact of US sanctions on Russia.
The Russian Rouble tumbled further, down 3.25% against the USD, to a 2-year low. Eurodollar and Pound weakened amid the boiling tension over Russia and Ukraine, while all of the other currencies were all up against the US dollar. The New Zealand dollar strengthened the most against the US dollar after the RBNZ increased the cash rate for the third time on Wednesday.
The leading cryptocurrencies ran off session highs and traded flat. Bitcoin was trading at $US37,856 after hitting the intraday at above $US39,000. Ethereum was at above $US2,600 after rising to above $US2,700.
There is growing pressure on crypto as major central banks raise concerns on the impact of the digital token markets to financial scalabilities, indicating further regulations are being considered.