Global markets tumbled on Tuesday after Russia’s president, Vladimir V. Putin, ordered troops into two breakaway regions in eastern Ukraine late on Monday.
Oil prices jumped higher, while stock indexes around the world declined. The Stoxx Europe 600 fell 0.6 percent, its fourth consecutive day of losses. Earlier, it had fallen nearly 2 percent. Futures pointed to a 1.1 percent decline in the S&P 500 when markets start trading later on Tuesday. (U.S. markets were closed on Monday for the Presidents’ Day holiday.)
In a speech on Monday, Mr. Putin said that Ukraine was a “country created by Russia,” and he signed a decree recognizing the independence of the breakaway regions, Donetsk and Luhansk, before sending in troops. European and American leaders have said that they will impose further sanctions in response.
The MOEX, Russia’s benchmark stock index, dropped more than 5 percent on Tuesday, following a 10.5 percent plunge the previous day, which was the worst single-day drop since March 2014, during the annexation of Crimea.
Government bond yields fell as traders sought the safety of Treasuries. The 10-year yield on U.S. Treasury notes declined two basis points, or 0.02 percentage points, to 1.90 percent. The potential global economic ramifications of the conflict in Ukraine have pulled down benchmark U.S. bond yields, which about a week ago were at their highest since mid-2019 as traders prepared for the Federal Reserve to begin raising interest rates to tackle inflation.
A war between Ukraine and Russia is likely to disrupt global supply chains of commodities, causing food and energy costs to rise and increasing the risk of a prolonged period of faster inflation. Russia is the world’s largest supplier of wheat and is a critical source of energy for Europe, providing nearly 40 percent of the continent’s natural gas and 25 percent of its oil. An extended conflict could worsen Europe’s already high energy bills.
Futures of Brent crude, the European benchmark, rose nearly 4 percent to about $99 a barrel.
Asian stock markets closed lower. The Hang Seng Index in Hong Kong fell 2.7 percent, its worst day since July, and the Nikkei 225 in Japan dropped 1.7 percent.
