Geopolitical concerns over the crisis in Ukraine, and the ever-closer possibility of an invasion by Russia, took their toll on stocks around the world: major stock indices plummeted, and bonds rose against the dollar, as investors braced for the Federal Reserve to reiterate its hard-line policy.
While Russia denies planning an invasion, it is said to have provoked the crisis by encircling Ukraine with forces from the north, east and south. Moscow now refers to the Western response as evidence to back up your argument that Russia is the target, and not the instigator, of the aggression.
Meanwhile, NATO announced that it was putting forces on alert and reinforcing Eastern Europe with more ships and fighter planes, which Russia denounced as an escalation of the tension over Ukraine.
NATO Secretary-General Jens Stoltenberg welcomed a series of deployments announced by alliance members in recent days, saying NATO “will continue to take all necessary steps to protect and defend all allies, including reinforcing the eastern part of the alliance.”
Even US President Joe Biden has not ruled out military action. The growing tensions led the stock markets to crash; however, at the end of the day the indices in the United States managed to recover from the lows they marked on the day.
The Nasdaq 100 had its worst start to the year; the S&P 500 index lost 10%: the global stock sell-off is accelerating and market value losses on Monday alone are now skyrocketing to nearly $3 trillion.
The Bloomberg Large-, Mid-, and Small-Cap Global Price Return Index fell 3% on Monday to less than $100 trillion, and total losses since the start of the year on the index stand at $8 trillion. The high-tech benchmark Nasdaq is down 16% so far this year and is on track for its worst performance ever in January, surpassing even losses from 2008, when the global financial crisis rattled stock markets around the world. the world. The latest selloff comes ahead of the Fed’s two-day meeting that begins Tuesday.
Stocks fell from lows amid a flurry of trading activity, with investors still looking for safety in Treasuries. The S&P 500 cut its losses in half, with volume 80% higher than last month’s average. The gauge remained around 10% below its record set just three weeks ago. Cboe’s volatility index spiked to its highest level in a year. The small-cap Russell 2000 approached a bear market after falling almost 20% from its peak. Haven currencies outperformed on concerns about potential Russian military action.
Morgan Stanley’s Michael Wilson said the January stock slump “fits very well” with the fire and ice narrative, in which markets were set for a drawdown amid tighter policy and a slowdown in the economy. economic growth. The pullback has to go further as “winter is here” for stocks.
The main European stock reference plummeted almost 4%. “The way the market is going and all these risks that they’re facing are really testing the mettle of the long-term investor,” said JoAnne Feeney, partner at Advisors Capital Management. The drop comes as cracks begin to form in the credit market, where traders had been bullish.
US fine-tunes possible military plans
The United States is fine-tuning its military plans for all scenarios in the Ukraine crisis, the White House said, as Washington works to bolster deployments to NATO’s eastern flank. White House press secretary Jen Psaki told reporters that the United States has “never ruled out” the option of providing aid to eastern flank countries “in advance of any invasion” of Ukraine by Russia. President Joe Biden is scheduled for a secure video call with several European leaders to discuss the Ukraine crisis.
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