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Gold and safe-haven assets surge
European stocks fell and the euro weakened amid escalating Ukraine-Russia tensions, while gold surged as investors sought safe-haven assets
European stocks drop over 1% on Ukraine-Russia escalation
Gold rises 1%, extending gains as safe-haven demand grows
Canada’s inflation rebounds to 2%, surpassing expectations
Major European stock indices declined over 1% on Tuesday, and US futures turned negative, as escalating tensions between Ukraine and Russia rattled global markets. Russian President Vladimir Putin broadened the conditions under which nuclear weapons could be deployed, amplifying fears of a wider conflict. This came after reports that Ukraine had launched an attack on Russian border regions using Western-supplied missiles.
Gold climbs amid safe-haven demand
Gold extended its rally for a second session, rising 1% to trade above $2,635 per ounce, as geopolitical risks drove investors toward safe-haven assets. The rebound follows a two-month low of $2,560 hit last week, underscoring heightened concerns over the war’s potential escalation and broader global ramifications. Despite the dollar’s strength, gold and US Treasuries saw robust demand.
In monetary policy, markets continue to anticipate a 25-basis-point rate cut from the Federal Reserve in December. However, growing evidence of economic resilience, including strong US labor market data, has tempered confidence in further easing measures.
Canada's inflation surprises to the upside
Canada’s annual inflation rate rebounded to 2% in October from a three-year low of 1.6% in September, surpassing expectations of 1.9%. The data reflects persistent price pressures that may influence the Bank of Canada’s monetary policy outlook as it navigates its easing cycle.
Euro struggles near one-year lows
The euro weakened to $1.0559, edging closer to last week’s one-year low of $1.0496. Concerns over geopolitical tensions and the economic fallout from new US trade tariffs weighed on the currency. President Putin’s updates to Russia’s nuclear doctrine and Ukraine’s missile strikes added to market jitters, steering investors toward safer assets.
European Central Bank (ECB) officials, including Vice President Luis de Guindos and Bundesbank President Joachim Nagel, flagged potential economic damage from US tariffs while downplaying inflation risks. The ECB has already implemented three rate cuts since June as inflation edges toward its 2% target, though growth forecasts have been revised downward twice. Markets now expect another 25-basis-point rate cut in December, with a smaller possibility of a more aggressive move.
Market focus shifts to key Eurozone data
Investors are now eyeing Eurozone wage growth data, set to be released on Wednesday, and PMI figures due on Friday. These indicators will provide further insights into the region’s economic momentum and influence expectations for future ECB policy moves.
