“It looks like the situation could escalate significantly at any moment and this will keep investors on their toes for the time being,” Craig Erlam, chief market analyst at Oanda, wrote in a research note on Tuesday. “We may be on the brink of something horrible happening and this continues to feed negativity in the markets,” he added.
The escalation of uncertainty over Ukraine was reflected in the sharp rise in energy prices. US crude futures jumped 5.4 percent to trade at $95.65 a barrel. Brent crude, the global benchmark, rose 3.8 percent to $99.17 a barrel.
Russia is one of the largest oil producers in the world. It is also a major source of natural gas.
Investors fear that the conflict in Ukraine could limit or halt the flow of Russian gas to Europe, making heating and lighting their homes more expensive. In 2020, Russia accounted for about 38% of the EU’s natural gas imports, according to the data agency Eurostat.
Germany, the region’s largest economy, is particularly at risk as it moves away from coal and nuclear power. So do Italy and Austria, which receive gas via pipelines that run through Ukraine.
Western countries are likely to respond to Russia’s invasion of Ukraine with punitive sanctions that could cut off Russian banks from the global financial system and make it difficult for the country to export oil and gas.
Chinese technology stocks hit
Concerns about a renewed tech crackdown by Beijing also dealt a blow to some of the sector’s biggest Chinese companies on Tuesday.
The Hang Seng Tech Index, which tracks the city’s 30 largest listed technology companies, lost 1.9%, down for the third day in a row.
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