Global markets fell sharply
Monday amid continued unrest in the Ukraine. Concerns are mounting over the
region's political and economic stability
as Ukraine's new leaders accused
Russia of declaring war.
The conflict is prompting investors to react in a
big way.
Russia's Micex index plummeted by as much as 11% on
Monday, with the ruble also taking a major hit. In a surprise move, the central
bank raised key interest rates in an attempt to insulate the country against
inflation and market volatility.
"The threat of war, the central government in
Kiev losing control over eastern regions, fear of imminent default -- these are
all unnerving messages for
markets," said IHS Global Insight's Lilit Gevorgyan. "Many investors
do not have much faith that the country is going to quickly turn around from
the double political and economic crisis."
Major European
stock markets tumbled Monday, with Germany's Dax down by just over 2.5%.
France's CAC 40 was
declining by 2.3% and London's FTSE
100 was off by roughly 1.7%. In Asia, Hong Kong's Hang Seng index closed 1.5% lower
and Tokyo's Nikkei dropped
1.3%.
Energy markets also reacted to the political crisis
over fears of a gas disruption. Natural gas prices were up by just over 2%
Monday and Brent crude prices
were rising by over 2% to just above $111 per barrel.
Global grain prices were also rising over concerns
that corn and wheat exports from Ukraine could be halted. The country is one of
the world's top grain producers. The price of wheat was up by over 5% Monday
morning.
Meanwhile, gold prices were rising as investors
seek to move their money into perceived safe-haven assets.
The country of 45 million has been in chaos since its
president, Viktor Yanukovych, was ousted in February, following months of
anti-government protests. Political unrest was originally sparked after
Yanukovych spurned a deal with the EU, instead favoring closer ties with
neighboring Russia.
The Ukrainian State Border Security Service said it
is experiencing regular attacks along the border with Russia by men in
unidentified camouflage uniforms. This comes after the Russian parliament
unanimously approved the use of
military force in Ukraine, despite threats of serious sanctions from the U.S.
and Europe.
Interim prime minister Arseniy Yatsenyuk said on
Sunday that Ukraine is "on the brink of disaster."
The country may find some economic relief soon, as
the International Monetary Fund is slated to consider financial aid to Ukraine
this week, according to a statement from G7 finance ministers.
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