Tensions in Ukraine and muscle flexing by Russia accentuated risk aversion in global markets on Thursday, with investors once again rushing for safe havens.
European markets were firmly "risk off" on Thursday, closing lower. Investors instead opted for safe havens like sovereign bonds and the U.S. dollar. The yield on the 10-year benchmark German bund has fallen to 1.563 percent this week from 1.688 percent. The greenback held near a two-week high against a basket of major currencies on Thursday, weighing on commodities such as oil. Wall Streetopened higher and U.S. Treasury yields also ticked lower.
Heightening tensions in Ukraine are seen as the key driver, with the focus now turning to Crimea, a peninsula in the south of the country home to an ethnic Russian majority.
Tensions in the Ukraine have increased in the area after fierce battles in Kiev last week. The capital has fallen into the hands of various pro-European opposition parties, with a new government pieced together on Wednesday evening. Former economy minister Arseny Yatseniuk was appointed the country's new prime minister on Thursday afternoon.
Earlier, Russian President Vladimir Putin dispatched the Russian army to Ukraine's borders for a military exercise and Reuters reported on Thursday, citing Interfax, that fighter jets along Russia's western borders have been put on high alert.
Ukraine's interim leader responded by calling on Moscow to keep its troops confined to their Crimean naval base.
Russia's rouble fell to a five year-low on Thursday amid this defiant response by Moscow. Stocks on Russia's MICEX 10 Index, which were trading higher earlier on Thursday fell sharply following the news. At around 2:30 p.m. local time they traded 2 percent lower.
Russia's Foreign Ministry has said that it will defend the rights of its compatriots in Crimea in a "strong and uncompromising" manner, according to Reuters. The United States has warned Russia that it would be a "grave mistake" to intervene militarily and has issued plans to provide Ukraine with $1 billion in loan guarantees.
No comments:
Post a Comment