Oil prices surged and shares fell after Vladimir Putin, Russia’s president, ordered troops into two Moscow-backed separatists regions in eastern Ukraine, putting his country on a war footing and forestalling attempts at a diplomatic solution to the crisis.
Brent crude, the international oil benchmark, jumped 2.3 per cent to $97.59 a barrel, a fresh seven-year high, while West Texas Intermediate, the US marker, rose 3.6 per cent to $94.32.
In equities, Hong Kong’s benchmark Hang Seng index shed 2.1 per cent, while Japan’s Topix index fell 1.2 per cent and South Korea’s Kospi lost 1 per cent. Australia’s S&P/ASX 200 shed 0.9 per cent.
“Markets will be dominated today by the decree from Russia,” said Robert Carnell, a strategist at ING, adding that “futures are suggesting a sharp pull back in risk assets”.
Futures tipped a tumble for Wall Street as US markets returned from a national holiday, with the S&P 500 set to drop 1.7 per cent and the tech-focused Nasdaq expected to fall 2.3 per cent.
In sovereign debt markets, bond yields fell as investors sought safety from falling share prices, with the yield on the 10-year US Treasury note down 0.06 percentage points to 1.867 per cent.
The moves in global markets also came after Moscow claimed it had destroyed Ukrainian military vehicles that entered Russian territory and Putin agreed to recognise two Moscow-backed separatist regions in eastern Ukraine.
