Global Markets Tumble on Rising Tensions in Ukraine

Nichole Harper
03 Mar, 2014
New York City

U.S. indexes extended world markets sell off after tensions in Ukraine escalated and Russia took steps to increase its military strength in Crimea. Markets in Germany fell 3%, in Poland declined 4.5% and in Russia plunged 11%. Crude oil and gold added 2%.

[R]12:45 PM New York – U.S. indexes extended world markets sell off after tensions in Ukraine escalated and Russia took steps to increase its military strength in Crimea. Markets in Germany fell 3%, in Poland declined 4.5% and in Russia plunged 11%. Crude oil and gold added 2%.[/R]

World markets backed off and European markets turned away from six-year highs and the Russian market index plunged after Ukraine crisis escalated.

After the weekend approval of Russian lawmakers to increase military strength in Crimea, world markets were surprised.

Crude oil prices increased $2.05 to $1.04.65 a barrel and copper, gold and natural gas prices rose as a standoff between the Ukraine’s government and Russia is likely to deepen.

S&P 500 index declined 0.8% or 13.86 to 1,845.59 and the Nasdaq Composite Index fell 35.65 or 0.8% to 4,272.47.

Markets in Europe dropped as much as 2% and Asian markets declined between 1% and 2%.

World leaders stepped up pressure on Russia’s president Vladimir Putin and Western European nations and International Monetary Fund sent teams to review financial positions of Ukraine.

In Kiev, interim and unelected Prime Minister Arseniy P. Yatsenyuk issued a blunt warning and said that the country was on the “brink of a disaster.”

“This is red alert – this not a threat, this is actually a declaration of war to my country,” Yatesenyuk, the leader of the opposition party and supported by former and recently freed Prime Minister Yulia Tymoshenko.

Ukraine’s finance minister is looking for at least $15 billion to meet its financial needs for the next few weeks and stabilize the economy and fund its rising current deficit.

European Markets

European markets plunged and extended worldwide market selloff after Russian lawmakers authorized President Vladimir Putin to increase military strength in Crimea.

The Russia’s Micex index plunged 11% and ruble eased 1% after Russia increased its interest rate 150 basis points to 7% at an unscheduled meeting of central bank.

Rising tensions in Ukraine also dragged Polish zloty by 1% to 4.203 against one euro and Polish stock market index by 4.5%.

The 10-year dollar denominated Ukraine government bond declined to yield at 10.33% and the bond maturing in 2014 plunged by 17 percentage point to yield 43%.

Hryvnia, the Ukraine’s currency declined and traded around 10 against one dollar as the country’s interim government seeks $15 billion in assistance from Western nations.

In London trading, FTSE 100 index slumped 1.5% or 101.19 to 6,709.01 and in Frankfurt the DAX index declined 3.2% or 311.9 to 9,381.13.

In Paris, CAC 40 index dropped 2.6% or 113.21 to 4,295.37.

Ferrexpo, trading in London with an iron-ore assets in Ukraine plunged 15% and steel maker Evraz with operating facilities in Ukraine and Russia plummeted 10%.

U.S. Stocks in Review

Berkshire Hathaway Inc ((BRK.A)) declined 0.5% to $172,900 and the diversified conglomerate’s holding company reported over the weekend 2013 earnings increased to $19.5 billion from $14.8 billion in 2012.

The company also increased its stake in Coca-Cola, Wells Fargo, American Express and IBM but lowered its stakes in U.K. retailer Tesco to 3.7% from 5.2%.

Chairman Warren Buffett dropped enough hints that the company is looking for large acquisitions and is most likely to partner with another investment firm as it did at the time of purchase of H.J. Heinz in 2013.