The global stock market experienced a downturn on Tuesday as investors grew concerned about escalating tensions between Russia and Ukraine. Reports emerged that Ukraine had fired US-supplied long-range missiles into Russia’s Bryansk region, marking the first time Western missiles were used to strike Russian territory. The attack came after President Joe Biden relaxed restrictions on the use of these weapons.
Senior US and Ukrainian officials confirmed the reports, further heightening geopolitical tensions. In response, Russian President Vladimir Putin approved changes to Moscow’s nuclear doctrine, stipulating that a conventional attack on Russia supported by a nuclear power would be considered a joint attack. The escalation in the conflict, which has now surpassed 1,000 days, spooked global financial markets.
The Stoxx 600 share index dropped over 1% to its lowest level since August, while the UK’s FTSE 100 index fell 0.5% in afternoon trading.
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In the US, the Dow Jones Industrial Average dropped by 0.8%, and the broader S&P 500 lost 0.4%.
Investors sought safe-haven assets, such as the US dollar, Japanese yen, and Swiss franc. The pound slipped against the US dollar, and the euro lost ground against the Swiss franc and the dollar. Market analyst Fawad Razaqzada from City Index and FOREX.com noted that the markets were “rattled” by Ukraine’s use of US-supplied missiles and expressed concern over Russia’s potential response.
Yields on UK, US, and eurozone government bonds fell as demand for these safe assets increased. Investors were also unsettled by reports of two undersea cables in the Baltic being mysteriously severed, an event addressed by German Defence Minister Boris Pistorius on Tuesday. As geopolitical tensions continue to drive market movements, uncertainty and heightened risks persist due to the ongoing conflict.
Investors are closely monitoring developments and their potential impact on global financial markets.
