Global markets follow negative course due to geopolitical risks

By Belgin Yakisan Mutlu

ISTANBUL (AA) – While the selling pressure has increased in global stock markets after Russia has recognized Ukraine's breakaway regions of Donetsk and Luhansk, the ongoing Russia-Ukraine crisis and the intensified data calendar are expected to affect Tuesday's pricing.

On Monday, Russian President Vladimir Putin signed a decree recognizing the pro-Russian separatist regions in eastern Ukraine.

The US strongly condemned Moscow's decision and banned investment, trade and financing to and from the so-called People's Republics of Donetsk and Luhansk.

The UN Security Council, which convened an emergency meeting last night, said the Russia-Ukraine crisis reached a dangerous point and developments risking a great conflict should be prevented at all costs.

Ukrainian President Volodymyr Zelensky said Russia is responsible for the consequences of the decisions taken, while Turkiye rejected the move, calling it "unacceptable".

While commodity prices, especially wheat, oil and gold, increased due to the increasing geopolitical risks following the recent developments, the new day started with a sharp decline in Asian stock markets, and US and European indices futures.

The barrel price of Brent oil tested the highest level of a week with $95.1, while gold saw an eight-month high at $1,914 per ounce.

Russia's RTS index closed on Monday at 1,207.5 points, down 13.2%, after hitting its lowest level since November 2020.

The US dollar/Russian ruble parity also decreased to 79.9 after seeing its highest level in 15 months with 80.5.

With these developments, the new day started with a decrease of almost 2% in the index futures contracts of the US on the New Yok stock market, which was not traded on Monday due to federal holiday.

The US dollar index was at 96.2 with a 0.2% decrease, while the 10-year bond yield of US continued to decline, which has been observed for about a week, and fell to 1.86%.

With political statements pouring amid increasing geopolitical risks in Europe, concerns about the possible sanctions by Western countries on Russia and the effects of a new cut in energy supply on the economies are priced in the stock markets.

The FTSE 100 index lost 0.39% in the UK, the DAX 30 index lost 2.07% in Germany, and the CAC 40 index lost 2.04% in France, while the losses in the index futures contracts exceeded 2% on average on the new trading day.

The euro/dollar parity, which was flat on Monday, is around 1.13 on Tuesday.

On the Asian side, the new day started with a sales-weighted course, while all indices posted negative signals.

Turkiye's BIST 100 index closed on Monday with an increase of 0.28% at 2,038.06 points.

Analysts stated that the global risk appetite has decreased with the increasing concerns about whether the Russia-Ukraine crisis will turn into a military conflict and said that individual investors should not act with panic and remain calm in this period when volatility is expected to continue.

* Writing by Gokhan Ergocun