On Monday, Asian stocks fell as warnings from Russia that it could attack Ukraine at any time propelled oil prices to seven-year highs, boosted bonds, and battered the euro.
The US stated on Sunday that Russia may construct a surprise justification for an assault, while reiterating its commitment to protect “every inch” of NATO territory.
Because of the gloomy attitude, MSCI’s broadest index of Asia-Pacific equities outside Japan down 0.2 percent, while Japan’s Nikkei fell 2.1 percent.
Following significant losses on Friday, S&P 500 futures gained 0.2 percent and Nasdaq futures gained 0.1 percent.
Since an unacceptably high estimate of US inflation spurred anticipation that the Federal Reserve might hike rates by a whole 50 basis points in March, markets have been in convulsions.
There was even talk of a last-minute inter-meeting increase. This was prompted in part by the scheduled closed Fed Board meeting on Monday, though the event appeared regular.
The Fed’s unchanged bond-buying timetable for the following month quelled the speculation, as the central bank has previously stated that it will only raise rates when its bond-buying programme has ended.
In an interview on Sunday, San Francisco Fed President Mary Daly downplayed the necessity for a half-point shift, saying that being too “abrupt and assertive” on policy could be counter-productive.
Since then, futures markets have reduced the likelihood of a half-point increase to approximately 40%, from nearly 100% at one point last week.
“Broad-based inflation pressures have given rise to earlier-than-expected demand for a globally coordinated turn toward tighter policy,” said JPMorgan chief economist Bruce Kasman.
“However, we do not anticipate aggressive action in March,” he continued. “In part, this reflects Omicron-related uncertainty, geopolitical concerns, and the buying power compression caused by high inflation—all of which weigh severely on current-quarter GDP.”
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