(Bloomberg) — Stocks slumped, with European equities shedding 1%, and global bonds climbed on worries over the latest escalation in Russia’s war against Ukraine.
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S&P 500 futures dipped 0.5%. The yield on 10-year Treasuries fell seven basis points to 4.34%. The moves were steeper in Europe, with German bond yields dropping to the lowest since October. The euro retreated 0.5%. Poland’s main stock index sank 2.6%.
Markets were rattled by news that President Vladimir Putin is pushing ahead with a nuclear doctrine that allows Russia to expand use of atomic weapons — an announcement that comes just days after the US gave Ukraine limited permission for long-range missile strikes on Russian territory. A report from RBC-Ukraine said the first such strike has taken place.
“The market reaction is logical, one could feel already yesterday that the tension, was rising,” said Andrea Tueni, head of sales trading at Saxo Banque France. “For the moment the market reaction is contained, some are still in a wait-and see-mode.”
Traditional haven assets including the Japanese yen, Swiss franc and gold gained. Ukraine’s sovereign dollar bonds fell the most among emerging-market peers, with a note due February 2029 losing 1.6 cent on the dollar.
Trump Picks
Also on Tuesday, traders were discussing how Trump’s nomination of Treasury secretary could shape policy. The transition team is considering pairing Kevin Warsh, a former Federal Reserve official, in the Treasury secretary role, with hedge fund manager Scott Bessent as director of the White House’s National Economic Council, according to people familiar with the matter.
“A more measured and experienced team in financial leadership positions in the US government will be positive for investor confidence,” said Rajeev De Mello, a global macro portfolio manager at Gama Asset Management.
Meanwhile, Bitcoin is back in the vicinity of an all-time high, climbing above $91,000. The digital asset has been supported by a series of developments highlighting the deepening embrace of the digital-asset industry by Trump.
Trump Media & Technology Group Corp. is in talks to buy digital-asset marketplace Bakkt Holdings Inc. And Nasdaq Inc.’s is planning to list options on the $43 billion iShares Bitcoin Trust as early as Tuesday.
