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Russian assets tank, leading global market sell-off after Putin acts


One child can be seen in a bus that was arranged for evacuation of locals, at the rebel-controlled Donetsk (Ukraine), February 18, 2022.

Alexander Ermochenko | Reuters

LONDON — Russian assets led a global pullback on Tuesday after Russian President Vladimir Putin ordered troopsTwo regions in eastern Ukraine that have been declared independent.

The Russian rubleAfter Putin’s announcement, the currency fell to below 80 US dollars. This is the lowest it has been in over two years. It was the Ukranian hryvniaHowever, the ruble lost 0.8% more. Russia’s MOEX stock indexMoscow’s late-morning slumped to 6%, its lowest level since mid 2020. Last time the RTS Index fell to 6.6%,

Capital Economics group chief economist Neil Shearing said Tuesday, in a note, that Russia’s economy would be affected largely by Western responses.

“Its balance sheet is stronger than at the time of the 2014 Crimea crisis – external debt is lower, and financial linkages with other major advanced economies are smaller,” Shearing said.

“Sanctions will continue to have an economic impact, however it is unlikely that this effect will be greater than 2014-15 when GDP declined by 2.5% and the country was in financial crisis.

European marketsThe opening of trading was sharply lower Tuesday morning, but the market recovered some losses around an hour later. Shares in Asia-PacificRetrenched also U.S. stock futures pointed to steep lossesWall Street will be open later in the morning.

There is still time oil prices surgedWith U.S. crudeJumping 5.4% to $96 a barrel, and an international benchmark Brent crude3.4% increase to nearly $99 per barrel

Sanctions expected

This comes just days after Putin declared Monday night that he will recognize Donetsk’s independence and Luhansk’s independence and signed a decree directing forces to enter two Donbas enclaves held partially by Moscow-backed separatists.

Russian President Vladimir Putin addresses the nation in a video message. He made this address after the Russian lower house and security council decided to acknowledge two Russian-backed separatist regions in Eastern Ukraine as independent entities.

Alexey Nikolsky | Sputnik | via Reuters

It United Nations Security Council held an emergency meeting in New YorkOn Monday, the conflict that has been raging for years entered a new stage. U.S. President Joe Biden has signed an executive decree prohibiting any new funding, investment or trade from the U.S. for the two separate regions.

Ukraine President Volodymyr ZelenskyyIn a broadcast address, Kyiv stated that it is dedicated to diplomacy and is not afraid of any one.

The White House is expected to announce more economic sanctions on Tuesday. European foreign ministers gather in Brussels for discussions about the EU’s future steps.

Sky News reported that Sajid Javid, the U.K.’s Health Minister, told Sky News Tuesday morning “the invasion of Ukraine has begun.”

Berenberg Chief Economist Holger Schmieding said the big uncertainty remains as to whether Putin will move Russian troops further into the Donbas — beyond areas held by pro-Russia groups — encroaching on Kyiv-held free Ukraine.

“If he does not stop, sanctions will weaken Russia’s economy in the long-term with little effect on the advanced nations. Schmieding stated that markets would soon return to normal.