Cedric Waitere travelled to Ukraine after Russia's full scale invasion, against NZ Government advice, and now lives in central Kyiv. Video / TVNZ
European stocks fell and government bonds gained on Tuesday as investors responded to the latest escalation of the war in Ukraine.
The pan-continental Stoxx Europe 600 index finished 0.5% lower. Germany’s Dax and the Cac 40 in Paris both lost 0.7%.
On Wall Street, the S&P 500 erased mostof its early losses to rise 0.1% by mid-morning.
Nvidia, one of the world’s most valuable companies owing to its dominance of the AI processor market, boosted the technology-heavy Nasdaq as it climbed 3% ahead of an earnings release on Wednesday.
Other technology giants, including Amazon and Apple, rose 1%. The Nasdaq added 0.6%.
Further unnerving investors, Russian President Vladimir Putin signed a decree lowering the potential threshold for the use of nuclear weapons.
“This is classic risk-off where people are flying to safety,” said Emmanuel Cau, head of European equity strategy at Barclays. “It is very much about [escalation] worries.”
Sectors such as retail and banking, which are sensitive to concerns about the economy, were a drag on European indices.
However, defence stocks rose; shares in Saab of Sweden and Rheinmetall of Germany were up more than 3.6% and 3.9% respectively.
Assets seen as a haven in geopolitical turbulence also strengthened.
The Japanese yen climbed 0.4% to ¥154 to the dollar while the Swiss franc rose 0.1% to SFr1.13 against the US currency. The dollar, which has rallied since the US election, traded flat against a basket of rival currencies on Tuesday evening.
Ukraine's President Volodymyr Zelensky inspecting the construction of fortifications at an undisclosed location in Donetsk region, amid the Russian invasion of Ukraine. Photo / AFP, Ukrainian Presidential Press Service
Gold was up 0.7% to $2630 per troy ounce, regaining some ground lost in a sell-off after the election.
Bitcoin, which some traders see as a digital version of gold, rose 2% to trade just under its all-time high of $93,400 per coin.
While US stock markets rallied in the wake of the US presidential election, European shares have fallen as investors bet president-elect Donald Trump’s plans for tariffs will hurt the European economy.
Andrew Pease, global head of investment strategy at Russell Investments, said the renewed Ukraine worries had “added to the sense of geopolitical unease ahead of the Trump transition”.
In bond markets, the yield on benchmark 10-year US Treasuries fell 0.04 percentage points to 4.37% while German yields also declined. Yields fall when prices rise.
