Asia-Pacific Markets Tumble after Putin Accuses West of “Nuclear Blackmail”

The major Asia-Pacific stock indexes finished lower on Wednesday with Japan’s Nikkei 225 touching a two-month low ahead of today’s U.S. Federal Reserve policy decisions at 18:00 GMT.

Investors also flocked to the safe-havens such as government bonds, the U.S. Dollar and the Japanese Yen after Russian President Vladimir Putin on Wednesday ordered a partial mobilization and accused the West of “nuclear blackmail”.

On Wednesday, Japan’s Nikkei 225 Index settled at 27313.13, down 375.29 or 1.36%. Hong Kong’s Hang Seng Index finished at 18444.62, down 336.80 or -1.79% and South Korea’s KOSPI Index closed at 2347.21, down 20.64 or -0.87%.

In China, the benchmark Shanghai Index settled at 3117.18, down 5.23 or -0.17% and in Australia, the S&P/ASX 200 Index finished at 6700.20, down 106.20 or -1.56%.

Investors Spooked as Putin Signals Major Escalation of War in Ukraine

Russian President Vladimir Putin rattled the Asia-Pacific markets on Wednesday after he called up 300,000 reservists to fight in Ukraine and said Moscow would respond with the might of all its vast arsenal if the West pursued what he called its “nuclear blackmail” over the conflict there.

It was Russia’s first such mobilization since World War Two and signified a major escalation of the war, now in its seventh month.

In a televised address to the Russian nation, Putin said:  “If territorial integrity of our country is threatened, we will use all available means to protect our people – this is not a bluff”.

Russia had “lots of weapons to reply,” he said.

Sellers hit stock markets in the Asia-Pacific region. The Euro also tumbled, but gold and crude oil rose with the latter jumping 3%.

Clearly, Putin upped the ante in the region by bringing up the ‘Nuclear Card’ and investors will be watching for how the West responds. More sanctions on the way? Oil and commodity shortages? Faster route to a massive global recession? These are factors that investors have to consider as the major central bankers push for more rate hikes.

Asian Development Bank: Asia Shows Signs of Recovery, but China is a Drag

The Asian Development Bank now sees growth of 4.3% in 2022 and 4.9% in 2023 for emerging Asian economies, according to the latest updates in its report.

The Manila-based lender slashed its forecasts for China to 3.3% in 2022 from its previous prediction of 4% revised in July, dragging down the wider region’s growth prospects.

Taiwan and South Korea, in particular, are likely to see a decline in export demand, Asian Development Bank Chief Albert Park told CNBC’s “Squawk Box Asia.”