The rising threat of war between the Ukraine and Russia is scaring investors and is having an immediate effect on commodity prices. Russia's intervention in Ukraine has driven up prices for crude oil and gold as the heightened tensions spurred investors to seek safe havens and dispose of any exposure to the region. Government debt has also zoomed.
Gold futures traded near its highest level in nearly four months jumping 2 per cent to trade at almost $1,350 an ounce as crude prices rose more than $2 a barrel moving above $104 US per barrel. Prices of top-rated euro zone government bonds also surged.
The Moscow bourse slumped 11 percent, with the MICEX losing 12.7 per cent, wiping out almost $60 billion US worth of stock market value. The Russian rubel hit all-time lows against its major traders, falling below 50 to the euro for the first time ever and is below 37 against the U.S. dollar, also a record.
Stocks across Europe and on Wall Street also took a beating as Germany's DAX sank 2.4 per cent to 9,455.1, France's CAC-40 shed 1.6 per cent to 4,337.71 and Britain's FTSE 100 lost 1.3 per cent to 6,723.72. British Foreign Secretary William Hague has called to the Russian-Ukrainian conflict the worst crisis Europe has faced this century.
Market volatility indexes, a sign of investor apprehension, surged yesterday, with the Euro STOXX Volatility Index .V2TX spiking 30.4 percent in its biggest one-day gain since 2011. The U.S. CBOE volatility index surged 20 percent at one point, and ended the session 14.5 percent higher.