World shares drop after Putin orders troops to east Ukraine

Tokyo's Nikkei 225 index dropped 2.2 per cent and the Hang Seng in Hong Kong fell 3.2 per cent in early trading; oil prices also spiked

Shares fell sharply in Asia on Tuesday after Russian President Vladimir Putin ordered troops into separatist regions of eastern Ukraine, suggesting a long-feared invasion was possibly under way.

Tokyo's Nikkei 225 index dropped 2.2 per cent and the Hang Seng in Hong Kong fell 3.2 per cent in early trading Tuesday. Oil prices jumped, with US crude up 2.8 per cent. The future for the S&P 500 dropped 1.7 per cent while the contract for the Dow industrials lost 1.5 per cent.

US markets were closed on Monday for Presidents Day.

In Europe, shares slipped Monday as investors awaited developments in the Ukraine crisis. Germany's DAX gave up 2.1 per cent. In Paris, the CAC 40 in Paris declined 2 per cent. Britain's FTSE 100 fell 0.3 per cent.

Russia's MOEX index dropped nearly 11 per cent. The ruble was down 3.2 per cent against the US dollar.

Also Read — Sensex crashes over 1,000 pts as Russia-Ukraine crisis worsens

Western powers fear Russia might use skirmishes in Ukraine's eastern regions as a pretext for an attack on the democracy, which has defied Moscow's attempts to pull it back into its orbit.

A vaguely worded decree signed by Putin cast the order for troops to move into eastern Ukraine as an effort to “maintain peace." He also recognised the independence of the separatist regions, apparently dashing slim remaining hopes of averting a conflict that could cause massive casualties, energy shortages on the continent and economic chaos around the globe.

The White House issued an executive order to prohibit US investment and trade in the separatist regions, and additional measures—likely sanctions—were to be announced Tuesday.

In Asian trading, the Nikkei 225 in Tokyo was down 582.97 points at 26,327.90 while Hong Kong's Hang Seng gave up nearly 800 points to 23,390.29. South Korea's Kospi lost 1.8 per cent to 2,693.38 and the Shanghai Composite index fell 1.2 per cent to 3,448.49. Australia's S&P/ASX 200 lost 1.4 per cent to 7,134.50.

Russia is a major energy producer and the tensions have led to extremely volatile energy prices.

US benchmark crude oil advanced $2.42 to $92.63 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international pricing basis, added $1.38 to $96.77 per barrel.

The tensions in Eastern Europe have added to worries over how the world's central banks, especially the U.S. Federal Reserve, will act to counter surging inflation

Also Read — Markets brace for heavy falls as Russia-Ukraine crisis escalates

Outbreaks of coronavirus fueled by the highly contagious omicron variant are another worry.

On Wall Street on Friday, stocks capped a week of volatile trading on Wall Street with a broad sell-off. The S&P 500 and Dow Jones Industrial Average both slipped 0.7 per cent. The Nasdaq composite bore the brunt of the selling, skidding 1.2 per cent. Small company stocks also fell, with the Russell 2000 index down 0.9 per cent.

Treasury yields have fallen as investors shift money into the safety of US bonds. The yield on the 10-year Treasury, which affects rates on mortgages and other consumer loans, sank to 1.85 per cent by early Tuesday from 1.93 per cent on Monday.

In currency trading, the US dollar slipped to 114.62 Japanese yen from 114.74 yen late Monday. The euro fell to $1.1300 from $1.1312.

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