Consumers were looking forward to a tough day in Russia, Ukraine and global markets after it reopened on Tuesday, after Vladimir Putin stepped up to the brink of a Western crisis that feared it could spark a major war.
In a lengthy television interview, the Russian president recognized the two rebel zones of Donetsk and Luhansk in Jap Ukraine as neutral organizations and described Ukraine as an important part of Russian history.
Tensions have already shaken world markets this year and cost tens of billions of dollars in Russian and Ukrainian goods, yet Monday’s rise is expected to cause the worst.
“It may be an understatement to say that it will be a bad day (in the markets) tomorrow,” said Viktor Szabo, portfolio manager for abridn in London.
“I hope we don’t get here, but it’s an important step.”
Russian markets are still open however when Putin presents his decision to stay on television following calls affecting German and French leaders.
The loss of rubles reached 3.3%, while the Moscow stock market fell sharply in a year because the RTS dollar index ended the day by a decrease of 13.2% and the Russian MOEX index based on the double lost 10.5%.
Analysts at the Commonwealth Financial institution of Australia (OTC 🙂 warned traders ahead of the Asian opening on Tuesday that Putin’s decision to recognize Ukraine’s separatist territories would exacerbate the escalating tensions.
“People in the financial market are now looking forward to a response from the United States and Europe,” he added.
That response is expected to return in the form of strong new sanctions.
Although the various measures may come first, among the worst of measures would be to cut off Russian banks in the SWIFT banking system and order the closure of all EU, UK and US funds holding bonds with Russian authorities.
By the end of last year, foreigners had seized more than $ 43 billion of OFZ, as indicated by Russian bonds called rubles.
“We have agreed (with Britain) and (the EU) that we will work together to urgently send sanctions against Putin’s regime, and we have worked with Ukraine,” British Foreign Minister Liz Truss tweeted (NYSE 🙂 following the name of European Union (EU) UN Secretary-General Josep Borrell.
FUTURES SLUMP
Yields in Russia’s 10-year OFZ are expected to rise and reach 10.6% over Monday. Russia has one of the world’s largest FX stockpiles in the world at $ 630 billion, yet the price of securing its huge debt against failure has skyrocketed since early 2016.
Analysts have also warned that a broader perspective on global market confidence, combined with the pressures of growing global borrowing rates this year, has already hit the crisis.
Futures markets were showing a 1.8% decline in Wall Road over time, a 2.2% decline in 2, a 2.5% decline in Nasdaq and a 3.7% decline in Europe. The need for a common protected area also recognized the U.S. convention. Treasuries.
“This move will obviously increase uncertainty and thus create an additional threat to the world-threatening asset,” said Manik Narain, head of technology development at UBS.
“We will see a negative response,” added Ken Polcari, chief executive officer of Kace Capital Advisors in Florida. “We will look at Jan. 24 lows which were 4,220 in the S&P 500”.