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Stocks and currencies seesawed on Wednesday after a rocket that struck inside the Polish border fueled fears of an escalation of the war in Ukraine.

Shares in Hong Kong, Australia and South Korea fell, as did European equity futures, amid significant volatility in intraday prices. US futures pared early declines to trade little changed.

Positive sentiment from the outlook for slower interest rate hikes from the Federal Reserve evaporated as traders in Asia turned their attention to geopolitical risks. Comments from US President Joe Biden — suggesting the missile was unlikely to have been fired from Russia — had only a temporary impact on investor confidence.

The Polish zloty trimmed its losses against the dollar while a gauge of the greenback traded within a broad range through the day, underscoring investor uncertainty.

“After a strong rebound in US equities and in the Chinese equity markets, I think it makes sense to have some consolidation,” Grace Tam, chief investment adviser for Hong Kong at BNP Paribas Wealth Management, said on Bloomberg Television. “With what happened in terms of the missile, it could be the trigger of the consolidation. Sentiment has gone from risk-on to a little bit risk-off.”

Treasury yields saw small gains after recent declines in line with pricing for the Fed’s policy rate. Oil and gold both slipped.

Key events this week:

• US business inventories, cross-border investment, retail sales, industrial production, Wednesday

• Fed’s John Williams, Lael Brainard and SEC Chair Gary Gensler speak, Wednesday

• ECB President Christine Lagarde speaks, Wednesday

• Eurozone CPI, Thursday

• US housing starts, initial jobless claims, Thursday

• Fed’s Neel Kashkari, Loretta Mester speak, Thursday

• US Conference Board leading index, existing home sales, Friday

Story continues

Some of the main moves in markets:

Stocks

• Futures on the S&P 500 were little changed as of 2:45 p.m. Tokyo time. The S&P 500 gained 0.9%

• Nasdaq 100 futures were little changed. The Nasdaq 100 rose 1.5%

• The Topix Index was little changed

• The Hang Seng Index fell 1.2%

• Australia’s S&P/ASX 200 fell 0.3%

• The Shanghai Composite Index fell 0.4%

• Euro Stoxx 50 futures fell 0.4%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro rose 0.2% to $1.0373

• The Japanese yen fell 0.3% to 139.73 per dollar

• The offshore yuan fell 0.5% to 7.0815 per dollar

Cryptocurrencies

• Bitcoin rose 0.2% to $16,919.25

• Ether rose 0.8% to $1,255.46

Bonds

Commodities

• West Texas Intermediate crude fell 0.8% to $86.24 a barrel

• Spot gold fell 0.3% to $1,774.30 an ounce

This story was produced with the assistance of Bloomberg Automation.

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