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Asian stocks drop, gold rises amid Ukraine crisis

stocks drop

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.5%, Nikkei dropped 0.91%, S&P/ASX200 finished down 0.51%, Hang Seng Index shed 1.1%

Asian share markets dropped and safe haven assets such as gold rose on Tuesday, as investors contemplated the implications of a potential imminent Russian invasion of Ukraine.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.5% after stock markets in the United States and Europe lost ground on Monday.

Japan’s Nikkei dropped 0.91% while in Australia, the S&P/ASX200 finished down 0.51%.

Hong Kong’s Hang Seng Index shed 1.1% although China’s CSI300 Index bucked the sell-off across the region and was up 0.7%.

Geopolitical risk will be the clear driver of sentiment for markets this week, said Marcella Chow, global markets strategist at JPMorgan Asset Management.

The broader risk appetite among investors is going to be under pressure and as a result we expect to see a flight to safety in gold, U.S. dollars and longer-term Treasuries, Chow said.

The negative tone in Asia was set to be replicated in equities markets across the world on Tuesday.

In early European trades, pan-region Euro Stoxx 50 futures were off 0.32% at 4,039, German DAX futures eased 0.31% to 15,033 and FTSE futures down 0.31% at 7,448.5.

U.S. stock futures, the S&P 500 e-minis, were down 0.07% at 4,391.

The share market sell-off driven by risk aversion helped push gold to an eight-month high as investors sought shelter in the traditional safe haven asset.

Spot gold was up 0.4% at $1,877.72 per ounce.

In the near term there will be support for gold because of the uncertainty of a potential military conflict, Jack Siu, Credit Suisse’s chief investment officer for Greater China, told Reuters.

It can be a hedge but the overall fundamentals of central banks hiking rates and a firming dollar in the next few weeks and months are negative factors for gold, Siu said.

Oil shot to the highest level in seven years in U.S. trading on Monday on Russia-Ukraine tensions but weakened slightly during the Asian session.

Global index provider MSCI Inc said it was monitoring developments in Ukraine and access to the Russian equity market.

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