Putin’s nuclear doctrine and Ukraine’s ATACMS strike shake global markets

Equity markets experienced a decline while global bond prices rose, driven by growing concerns over a fresh escalation in Russia's conflict with Ukraine.

S&P 500 futures slipped by 0.3%, though earlier losses were trimmed as Walmart Inc. surged roughly 4% in premarket trading after revising its outlook upward, Caiber.Az reports via Bloomberg.

The yield on 10-year US Treasury notes fell four basis points to 4.37%. European markets saw sharper moves: German bond yields dropped to their lowest level since October, and the region’s stock benchmark fell nearly 1%. In Poland, the main stock index tumbled more than 3%.

Investor anxiety spiked following reports that Ukrainian forces allegedly carried out a strike on Russia's border area using Western-provided missiles. Adding to tensions, Russian President Vladimir Putin approved an updated nuclear doctrine broadening the scenarios for atomic weapon use, which now includes responding to a large-scale conventional attack on Russian territory. This follows Putin’s September pledge to modify the nuclear policy.

“The market response is relatively restrained for now,” commented Andrea Tueni, head of sales trading at Saxo Banque France. “Some investors are still in a wait-and-see approach.”

Safe-haven assets reacted positively: the Japanese yen, Swiss franc, and gold all gained. Ukrainian sovereign dollar bonds saw the steepest decline among emerging-market debt.

Commodity markets also showed movement. Natural gas futures climbed up to 1.1%, reaching near their highest levels of the year. Gold increased 0.9%, trading at $2,635 per ounce. However, oil prices dipped slightly, even as Europe’s largest oil field gradually resumed operations after a power outage.

Despite some easing in the movements, the sudden market adjustment underscored the fragility of global markets to geopolitical risks. The bond market had been on a prolonged downward trend since mid-September, as investors anticipated that policies under Donald Trump would spur economic growth and inflation.

Trump’s economic influence remained a key focus, as his transition team deliberated Treasury secretary candidates. Reports indicated that former Federal Reserve official Kevin Warsh was being considered for the position, potentially alongside hedge fund manager Scott Bessent as the head of the White House National Economic Council.

In the conflict escalation, Kyiv announced on November 19 that it targeted a Russian arsenal near Karachev, located over 110 kilometres (70 miles) from Ukraine, in what local Ukrainian media described as the first strike using US-supplied ATACMS missiles. However, there was no official confirmation from Ukrainian authorities on the specific weapon used, with military officials and the intelligence agency not immediately commenting. Ukrainian media, citing unnamed sources, reported the use of ATACMS for the attack in Karachev, although verification was pending.

By Tamilla Hasanova