(Bloomberg) — Stocks tumbled, with European stocks down 1% and global bonds rising on concerns about the latest escalation in Russia’s war against Ukraine.
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S&P 500 futures fell 0.5%. The yield on ten-year government bonds fell by seven basis points to 4.34%. In Europe, moves were steeper, with German bond yields falling to their lowest levels since October. The euro fell 0.5%. Poland’s main stock index fell 2.6%.
Markets were rocked by news that President Vladimir Putin is moving ahead with a nuclear doctrine that would allow Russia to expand its use of nuclear weapons – an announcement that comes just days after the US gave Ukraine limited permission for long-range missile strikes on Russian territory. According to a report by RBC-Ukraine, the first such strike has taken place.
“The market reaction is logical. Yesterday you could already feel the tension increasing,” says Andrea Tueni, head of sales trading at Saxo Banque France. “Once the market reaction is under control, some are still waiting.”
Traditional port assets including the Japanese yen, Swiss franc and gold rose. Ukraine’s dollar-denominated government bonds fell the most among emerging market peers, with a bond due February 2029 losing 1.6 cents against the dollar.
Trump picks
Also Tuesday, traders discussed how Trump’s appointment as Treasury secretary could shape policy. The transition team is considering pairing Kevin Warsh, a former Federal Reserve official, in the role of Treasury secretary with hedge fund manager Scott Bessent as director of the White House National Economic Council, according to people familiar with the matter.
“A more measured and experienced team in financial leadership positions across 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 near an all-time high, above $91,000. The digital asset sector is being buoyed by a series of developments that highlight Trump’s deepening embrace of the digital asset industry.
Trump Media & Technology Group Corp. is in talks to buy digital asset marketplace Bakkt Holdings Inc. And Nasdaq Inc. plans to list options on the $43 billion iShares Bitcoin Trust as early as Tuesday.