Rising geopolitical tensions surrounding Ukraine weighed down stocks
Wall Street stocks managed to stage a bounce and closed the session in positive territory after a dramatic decline earlier in the day. Rising geopolitical tensions surrounding Ukraine coupled with the Fed policy weighed down stocks and boosted the safe-haven dollar. The selling pressure intensified after NATO said it was reinforcing Eastern Europe with more ships and fighter jets in response to Russia’s military build-up at Ukraine’s borders. As such, the Dow and the S&P 500 added 0.3%, while the Nasdaq Composite gained 0.63% overnight.
Asian stocks extended losses on Tuesday, with geopolitics staying in the market focus amid growing fears of a possible Russian invasion of Ukraine. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.2% to notch one-month lows, while Chinese stocks posted their biggest daily drop since July last year. US stock index futures also fell in Asian hours. Adding to nervousness, the Federal Reserve begins its two-day meeting later today. For now, money markets are priced for a first rate hike in March.
Bucking the trend, European equity markets opened sharply higher today after a sell-off witnessed at the start of the week, with investors remaining focused on tensions between the West and Russia over Ukraine. The pan-European Stoxx 600 gained 1% in early trade, with all sectors starting the session in positive territory.
Meanwhile, the safe-haven dollar stays elevated after a rally seen on Monday amid widespread risk aversion. EURUSD derailed the 1.1300 figure but refrained from a deeper retreat and was last seen clinging to the psychological level. Still, it looks like the common currency could see fresh losses in the coming days if tensions over Ukraine continue to rise and the fed delivers a more hawkish tone than expected.
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