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Stocks swing as geopolitical tension intensifies, USD weakens

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Asia markets are set to open lower following a wild session in both EU and US markets overnight with sanctions being imposed on Russia as tension over Ukraine escalates. SPI futures are down 6 points and the NZX 50 is 4 points lower in early trade.

US and EU stocks

Both US and EU stocks fell initially but bounced off session lows as investors digest ongoing geopolitical tension. The US President announced sanctions on Russian bank VEB, Russia’s sovereign debt, and elites together with their family members.

The Dow Jones Industrial Average fell 482 points, recovering from a 600-points-loss earlier. The S&P 500 slid 1.01% after falling 2%, knocking on correction territory. The Nasdaq was down 1.23% but also bounced off the intraday low.

All of the 11 sectors closed in red on the S&P 500. Consumer discretionary slumped 3.33%, leading the broader markets losses. Tesla Motors dropped more than 4%, Nvidia fell 1%. The tech giants all finished lower, with Apple and Meta Platforms both down 2%. Coinbase slumped 6.43% ahead of its earnings report on Friday.

European markets showed resilience in the overnight session, with Euro Stoxx 50 closing flat after it dipped 2.3% and Dax down 0.26% after paring a 2.4%-loss earlier.

Treasuries

The government bonds steadied at where they closed last Friday. The 10-year US Treasury yield was flat at 1.934%, but it fell to 1.84% initially as investors looked for safe-havens. The US benchmark bond yield was trading above the 2%-mark when markets priced in a more aggressive Fed move on rate hikes.

The German 10-year Bond Yield steadied at 0.23%.  The France 10-year Bond Yield traded at 0.72%.

Commodities

Gold futures rose $US2.5 to $US1,902 per ounce after it hit an intraday high at $US1,910. The safe-haven asset is somewhat losing stream while investors are assessing the Ukraine crisis.

WTI crude futures were around $US93 a barrel, having surged more than 4% to a more than seven-year high of almost $US96 earlier on worries about possible supply disruptions amid escalating tensions in Europe. The momentum was not as strong as it was in January and early February, as investors appear to weigh the ongoing Ukraine tension and a potential deal to be reached in the Iran nuclear negotiation.

Currencies

Russian rouble recovered some losses from a day ago, up 1% against the USD. The US dollar strengthened against most of the safe-haven currencies, such as the Japanese Yen and Swiss Franc, but weakened against the commodity currencies, including AUD and NZD. The NZD strengthened the most against the US dollar ahead of the RBNZ policy meeting later today when it is expected to raise interest rates for the third time since last year. The Canadian dollar, however, fell against the greenback due to moderating oil prices.

Cryptocurrencies

The crypto markets also bounced off intraday lows with the risky asset resilient on Tuesday. Bitcoin was flat at just above $US38,000 after falling to close to $US36,000, and Ethereum was trading above $US2,600 after dropping down below $US2,500.


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