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Investing.com – Asia Pacific stocks were down on Tuesday morning following Russia’s troops into breakaway regions of eastern Ukraine, intensifying tensions between the West and Russia over Ukraine. Oil surged to a seven-year high.
Japan’s Nikkei 225 fell 2.09% by 9:44 PM ET (2:44 AM GMT). The safe-haven yen edged about 0.2% higher early in Asia to a nearly three-week high of 114.50 per dollar.
South Korea’s KOSPI fell 1.86%. The Bank of Korea will hand down its policy decision on Thursday.
In Australia, the ASX 200 was down 1.34%.
Hong Kong’s Hang Seng Index was down 2.81%.
China’s Shanghai Composite was down 1.13% while the Shenzhen Component was down 1.73%. The People’s Bank of China’s released the loan prime rate on Monday, which stayed unchanged at 3.7%.
Russia president Vladimir Putin recognized Donetsk and Luhansk in eastern Ukraine as independent entities, and ordered Russian troops to “maintain peace” in the two breakaway regions on Monday.
The U.S. and Europe vowed new sanctions against Russia’s move, but it was not clear whether the West will see the military action as the start of a full-scale invasion.
“We are much closer to military intervention, which of course is going to drive a lot of the risk off sentiment in the markets,” Carlos Casanova, senior Asia economist at UBP, told Reuters. He added the short-term volatility in markets was “relentless”, led by both geopolitical factors and the U.S. Federal Reserve.
Casanova said the move would lead to higher oil prices, an equity sell off, and people flocking to safe-haven assets like the Japanese yen.
The benchmark 10-year Treasury yields fell as much as 5.5 basis points to 1.8715%. Federal Reserve Governor Michelle Bowman said on Monday she will keep an eye on the economic data over the next three weeks to determine whether it is necessary to raise the interest rate by a half percentage point at the central bank’s next meeting in March.
On the data front, the Reserve Bank of New Zealand will hand down its policy decision on Wednesday.
