Dhara Ranasinghe shows us the market day ahead.

Markets are now taking back control of central banks and interest rates, as a result of warnings from Russia that Russia might invade Ukraine anytime.

Asian stocks outside Japan have dropped 1.5% while Tokyo shares fell over 2%. European stock futures are also down sharply.

Fears that Ukraine’s invasion could lead to sanctions by the U.S., European and other countries on Russia and disrupt oil exports have caused oil prices to soar.

Last time, the price of a barrel was $1 higher than $95

Hectic diplomacy to stop war is underway; German Chancellor Olaf Scholz goes to Kyiv and Moscow Monday for talks with Vladimir Putin.

BBC quoted the ambassador of Ukraine to Britain saying that Ukraine could withdraw its request to be a NATO member to prevent war with Russia. This is potentially a significant concession for Moscow.

Russia’s currency fell 0.5% against the dollar in the meantime, despite not benefiting from an oil price of $95

One consequence of tensions is the slow exit by investors from safer-haven debt. In early European trade, yields on German bonds are declining. They were once considered one of the most secure assets worldwide.

The Fed’s latest comments seem to have taken the edge of speculation suggesting that the Fed may increase its rate by 50 basis points in March, to limit inflation.

Being too “abrupt and aggressive” with rate increases could be counter-productive to the Fed’s goals, San Francisco Federal Reserve Bank President Mary Daly said on Sunday, signalling she is not yet prepared to come out of the gate with a half-percentage-point interest rate hike next month.

Markets should be more informed by key developments on Monday

ECB President Christine Lagarde speaks

– European earnings: Poste Italiane, Temenos

– Telecom Italia (MI:) board meets re KKR M&A bid

– It seems that the takeover talk is being stopped by Italy’s Banco BPM

DBS Singapore Bank Profit Recovers. Rate rise prospects Improve Outlook

Reuters poll: BoE raises rates once more in March. Inflation will soon peak – Reuters poll

(Graphic: Oil at seven-year highs, https://fingfx.thomsonreuters.com/gfx/mkt/znpnejoanvl/oil1402.PNG)