Selena Li and Xie Yan

HONG KONG, (Reuters) – Asian shares fell and U.S. futures plunged after a turbulent Wall Street session. Investors were nervous about Ukraine’s situation and eyeing the U.S. Federal Reserve in the wake of concerns about a global tightening of monetary policy.

NATO announced Monday that it would put forces on alert and reinforce eastern Europe with fighter jets and more ships. This was in response to Russia’s buildup of troops at the Ukraine border.

The MSCI’s Asia-Pacific broadest index, which excludes Japan, fell 1.2% and dropped 2% from August to its lowest point since August.

Around the region, there were dramatic declines. Hong Kong’s lost 1.64% while Korea’s dropped 1.67%. Australian benchmark dropped 2.73% and fell to an 8-month low. This was due in part to Tuesday’s inflation print, which stoked fear of rate rises down Under. [AZN0236PW]

Senior economist at UBP Carlos Casanova stated that Asian markets were being held back by rising oil prices and inflationary concerns, as well as mounting tensions with Ukraine.

On the plus side, some sectors are seeing more attractive valuations and strong earnings growth. “So I believe we’ll see a tug for war on the market this week,” said he.

U.S. futures also fell in Asian hours, Nasdaq futures shed 1.2% and S&P500 futures lost 0.95%, after U.S. stock markets had recovered strongly late in the session to close higher, recouping steep losses made early in the day, as bargain-seeking investors snapped up shares.

They finished with 0.29% gain, 0.28% increase and 0.63% more. [.N]

To keep traders alert, the Federal Reserve will open its meeting Tuesday night. Investors have begun to speculate that there may be a surprise rate rise.

Investors will also be watching for signs about the pace and timing of any rate rises later this year. Markets are pricing for a rate increase in March and three additional quarter-point increases before year end.

U.S. benchmark Treasuries remained neutral to some speculation. The benchmark 10 year yields were stable at 1.76% after a day of volatile trading that ended Monday close to where they began. [US/]

The central bank of Singapore tightened monetary policy in an unexpected move on Tuesday.

Market nervousness sent the dollar higher than most of its peer currencies. It was close to a two week high at 95.922, having gained 0.2% overnight. ()

Although the dollar rose briefly following the publication of high inflation, it failed to sustain its gains. At the time of writing, risk-friendly currencies were still near their one-month lowest.

Stock investors were further worried by the rising oil prices. Oil prices rose 0.5% to $83.73 a barrel, and were at $86.83, an increase of 0.65%. [O/R]

Investors sought security, but gold held onto its gains. Although the spot price was unchanged on Tuesday, it was close to $1,841 an troy ounce last week, which is still above its two-month high, $1,847.7. [GOL/]