Markets

Tensions in Ukraine send global markets downward

Russian stocks see their biggest decline in five years as markets across the globe fall

A vendor counts Russian rouble banknotes at a market in Moscow, March 3, 2014. Russian assets tumbled and the central bank hiked interest rates on Monday as markets took fright at the escalating tensions with neighbouring Ukraine. The rouble was down 2 percent to 36.41 against the dollar and it was also down 1.2 percent to 50.10 against the euro, trading at all-time lows. REUTERS/Maxim Shemetov (RUSSIA - Tags: BUSINESS)

Mon Mar 3 2014 - 17:51

US stocks sank, tracking a global selloff in equities, as Russia’s threat to invade Ukraine sent investors searching for havens.

The Standard and Poor’s 500 Index fell 0.5 per cent to 1,849.64 this morning in New York. The gauge closed at a record on February 28th.

"We never know what will happen with Russia and this always makes people nervous," said Michael Morris, head of equities at Mitsubishi UFJ Asset Management in London. "You have a president that is trying to expand Russia's global political powers but the country may not have the capacity for this fight. It's too soon to know what the outcome might be but I'm not at all surprised to see the markets down today."

The tensions sent stocks tumbling around the world, with the MSCI All-Country World Index sliding 0.8 per cent. Russian stocks had their biggest decline in five years and the Europe Stoxx 600 plunged 2 per cent, its biggest slide in five weeks.

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Emerging-market stocks dropped 1.5 per cent. Gold soared 2 per cent and Treasuries rallied.

“The Ukraine news is troubling, but there are always global risks and short-term fluctuations because of these risks,” Karyn Cavanaugh, a market strategist at ING USInvestment Management in New York, said. “I see this being short-term unless it escalates. If we do see some market gyrations and volatility, it could be a buying opportunity.”

The geopolitical tension comes after the SandP 500 rose 4.3 per cent in February, the most since October, to end the month at a record 1,859.45. Investors have been speculating that recent weakness in data from housing to jobs was caused by inclement weather and that the Federal Reserve will continue to support the economy. US equities are set to enter the sixth year of a bull market that started March 9th 2009.

Bloomberg

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