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Asia stocks set to fall, market tension growing

ukraine tension

Asia markets are set to open lower following a sharp fall in the European markets amid ongoing Russia-Ukraine tension. US markets were closed for a public holiday on Monday, but equity futures fell, with hopes fading that planned talks between the US and Russia over Ukraine might not go ahead.

SPI futures are indicating a 1% drop on the S&P/ASX 200 at the open and the NZX 50 is trading flat after a jump higher at the start of trading.

US and EU stocks

Risk-off sentiment led the broader market losses as the geopolitical tensions are at a boiling point. The three US index futures erased early gains and closed lower, pointing to a lower open in the US stocks on Tuesday. Dow Jones futures fell 308 points, or 0.91%. European markets fell sharply, with Euro Stoxx 50 slumping 2.17% and Dax falling 2.07%.

Early on Monday, both US President Joe Biden and Russian President Vladimir Putin accepted to meet at a summit, mediated by French President Emmanuel Macron, aiming to de-escalate the Ukraine tension. The broader stock markets initially gained on the news. However, later the Kremlin said there were no immediate plans to meet at the summit. 

Treasuries

US bond yields fell as risk-off sentiment sent bond prices higher last week. The 10-year US Treasury yield fell below 2% last Friday. The German 10-year Bond Yield steadied at 0.20%.  The France 10-year Bond Yield fell to 0.712%.

Commodities

The safe-haven asset gold futures surged further, to $US1907 per ounce, approaching the next potential key resistance close to $US1,920.

WTI futures bounced off intraday lows, closing 2.89% higher, to $US92.82 a barrel amid concerns of a tighter supply caused by the escalating Ukraine crisis.  On Sunday, the Arab oil-producing countries said OPEC+ should stick to the current output agreement of 400,000 barrels per day. At the same time, the Iran nuclear negotiations could be close to making a deal as stated by both EU and Iran.

Currencies

Russian rouble tumbled on the boiling Ukraine tension. Rouble weakened 3% against the USD, while the US dollar weakened against most of the other major currencies on Monday. The safe haven currencies, including the Japanese Yen and Swiss Francs, strengthened against the greenback. AUD and NZD were all up against the dollar. EUR/USD fell slightly to just above 1.13.

Cryptocurrencies

The crypto markets slid on risk-off sentiment. Bitcoin fell below $US38,000, and Ethereum was down to just above $US2,600.


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