Asian equities are trading in a risk-off mood, with tech and cyclical sectors leading the losses after some risks of Russia invading Ukraine. U.S. S&P 500 sunk, and the technology-heavy Nasdaq 100 shed 3%. The geopolitical trades are dominating trading flows at trading desks after Russia said it was a tit-for-tat move following an earlier expulsion of Russian diplomats from Washington. Still, U.S. Secretary of State Blinken said the U.S. would respond. U.S. President Biden also noted that the threat of Russian invasion into Ukraine is very high and believes Putin will invade Ukraine in a few days.
Safe-haven assets such as JPY and CHF were well bid, as were precious metals, with Gold rising above USD 1900. Worth paying close attention to the oil/energy markets as it didn’t work as a hedge yesterday, trading lower after optimism around an Iranian nuclear deal, which managed to overshadow the heightened Ukraine headlines. Some desks are calling for a bid in this Oil market pullback due to the challenges with supply, growing demand with economies reopening after Omicron and a growing risk of conflict with Russia in Ukraine. The geopolitical flows will be on the radar for the session ahead and U.S. option expiry. Participants could keep adding hedges to their portfolios as the weekend is near.
