Stock figures on a screen at the Tokyo Stock Exchange (TSE), operated by Japan Exchange Group Inc. (JPX), in Tokyo, Japan, on Thursday, Oct. 29, 2020. Japanese stocks pared losses after the Bank of Japans policy decision and as U.S. futures bounced back following a global equity rout. Photographer: Kiyoshi Ota/Bloomberg The report from state-run Tass said Putin decided to conduct a special operation to “protect” the Donbas region and that Russia doesn’t plan to occupy Ukraine.
Western powers are now likely to step up sanctions to penalize Russian aggression. The most recent U.S. step was to target the builder of the Nord Stream 2 gas pipeline linking Russia and Germany.
While Treasuries advanced, haven demand for bonds has been tempered by worries that commodity flows will be disrupted by the Ukraine crisis, stoking inflation and forcing central banks to step up monetary tightening.
The cost of everything from oil to grains to metals has jumped because of the standoff in eastern Europe. That’s helped to lift a gauge of agricultural commodities to a record high, heralding fresh challenges for a global recovery that was already struggling with elevated price pressures.
“Expect volatility to really persist in the next few months,” Lale Akoner, senior market strategist at BNY Mellon Investment Management, said on Bloomberg Television. She added geopolitical risks are flaring at a “very inopportune time” since markets are grappling with receding stimulus support.
In cryptocurrencies, risk aversion sparked a slide in Bitcoin, sending it toward $35,000.
Before the latest Ukraine drama, Federal Reserve Bank of San Francisco President Mary Daly said she’s watching geopolitical developments but has yet to see anything that would dissuade her from backing an interest-rate increase next month.
Bets on the number of rate increases by the Fed in 2022 have settled at about six 25-basis-point hikes. Investors remain worried that Fed tightening could choke the expansion in the world’s largest economy.
“Policy mistakes at this point in time are almost guaranteed,” Shana Sissel, president at Banríon Capital Management, said on Bloomberg Television. “The question isn’t, is there going to be a policy mistake, but how bad will it be? Will the Fed hike too much too fast, will they front-load everything?”
In Asia, the Bank of Korea raised its inflation forecast and stood pat on rates as it assesses the impact of three hikes since August.
Here are some events to watch this week:
- Bank of Korea policy decision Thursday
- EIA crude oil inventory report Thursday
- Fed officials Loretta Mester and Raphael Bostic speak Thursday
- U.S. new home sales, GDP, initial jobless claims Thursday
- U.S. consumer income, U.S. durable goods, PCE deflator, University of Michigan consumer sentiment Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 1.7% as of 12:10 p.m. in Tokyo. The S&P 500 fell 1.8%
- Nasdaq 100 futures slid 2%. The Nasdaq 100 fell 2.6%
- Japan’s Topix index fell 0.7%
- Australia’s S&P/ASX 200 index fell 3%
- South Korea’s Kospi index shed 2.4%
- Hong Kong’s Hang Seng index fell 2.6%
- China’s Shanghai Composite index lost 0.7%
- Euro Stoxx 50 futures slid 2.4%
Currencies
- The Japanese yen was at 114.89 per dollar
- The offshore yuan traded at 6.3112 per dollar
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro was at $1.1267, down 0.4%
Bonds
- The yield on 10-year Treasuries fell seven basis points to 1.92%
- Australia’s 10-year bond yield was at 2.19%, down nine basis points
Commodities
- West Texas Intermediate crude rose 3% to $94.94 a barrel
- Gold was at $1,922.79 an ounce, up 0.7%