Asian stocks dropped over Ukraine fears

Asian shares and European stock futures fell over the possibility of Russia invading Ukraine at any moment. It sent oil prices to seven-year peaks, strengthened bonds, and dragged down the euro.

EUROSTOXX 50 futures shed 1.7% and FTSE futures 0.6%. S&P 500 futures went 0.4% and Nasdaq futures 0.3% after losses on Friday.

On Sunday, the United States said Russia might make a surprise pretext for an invasion. At the same time, it reaffirmed a promise to defend every inch of NATO territory.

The cautious mood saw MSCI’s broadest index of Asia-Pacific shares drop 1.5%. Japan’s Nikkei lost 2.3%, while Chinese blue chips declined 0.8%.

Markets have faced disruptions since a high U.S. inflation reading flashed speculation the Fed might raise rates in March.

There was even talk about an emergency hike. That appeared in part of a closed Fed Board meeting for Monday.

After the talk, the Fed released an entire bond-buying schedule for the coming month without changes. The central bank said it would only hike after its buying had stopped.

On Sunday, San Francisco Fed President also noted the need for a move in an interview, saying being too aggressive on policy might be counterproductive.

Since then, futures markets had scaled back the risk of a rise to around 59%. JPMorgan chief economist Bruce Kasman said that broad-based inflation pressures gave rise to pressure for a synchronized shift toward restrictive policy worldwide. He added that they do not expect it to solve into aggressive action in March.

Overview of the stocks and Ukraine crisis

The risk of war in Ukraine affected the euro pulling back to $1.1346, from last week’s top of $1.1496. The safe-haven yen retrieved some ground to leave the dollar at 115.51 yen, from a peak of 116.34.

The decline in the euro lifted the dollar index to 96.058. The dollar was also up at 77.16 roubles after jumping 2.8% on Friday.