Investors' sentiment turned sour on Wednesday on concerns of the impact of aggressive economic sanctions on Russia in response to its invasion of Ukraine.
While financial markets have been whiplashed after the Russia-Ukraine border conflict, the extent of moves in financial markets does not entirely reflect the broader global economic repercussions from those sanctions by Western countries.
That underscores markets' reaction have been too soon to price-in a quick solution, with trading moves expected to be wild and volatile on Wednesday.
"Caution likely to dominate sentiment on Wednesday as the conflict in Europe intensifies," Robert Carnell, Regional Head of Research for Asia-Pacific at ING.
"Given the war raging on the outskirts of western Europe, it is some surprise how little markets have responded in total, with negative days punctuated by dip-buying in some markets," he added.
Investors brace for a rough week ahead, with Asian stocks in the red as the appetite for risky bets declined at the start of trading on Wednesday.
"The Russia-Ukraine conflict will probably continue to dominate markets for the foreseeable future. The announcement yesterday that Russia will not pay coupons to foreign holders on its government debt should push investors further into safe-havens," said ING's Mr Carnell.
"Support for starting the EU membership process for Ukraine shows the unity of support for Ukraine from Western Europe but is unlikely to help calm tensions," he added.
Oil prices rose on supply concerns as sanctions on Russian banks following Moscow's invasion of Ukraine hampered trade finance for crude shipments. Some traders opted to avoid Russian supplies in an already tight market.
Indian bond yields rose while the rupee weakened over 0.5 per cent on Wednesday, tracking a sharp rise in global crude oil prices, which will likely push already high inflation further up and weigh on the country's current account deficit.
Domestic bourses too were in the red, with the Sensex plunging over 700 points and the Nifty trading below 16,650.
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