‘Risk off’ as Russian jets patrol Ukraine border
Military 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 Street looked set for a negative open 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. Armed men seized the parliament in Crimea on Thursday and raised the Russian flag, according to Reuters.
(Read More: Armed men seize government HQ in Ukraine’s Crimea)
“A lot of it is risk aversion… the Ukraine crisis, and the risk of this spinning into a wider contagion over other emerging markets and particularly Russia,” Brendan Brown, head of research at Mitsubishi UFJ Securities told CNBC Thursday.
“The contagion would go from a sharp decline in the Russian rouble and concern about Russian banks, leading to German interdependence and other exposures to Russia and that would be the channel.”
The Associated Press, citing a Russian news agency, reported Thursday said that former Ukrainian President Viktor Yanukovych was staying in a “Kremlin sanatorium” outside Moscow.
Open all references in tabs: [1 – 4]