Worse Yet To Come For Global Markets, With No De-Escalation In Sight

After a pause following a volatile trading pattern, analysts have turned cautious and said downside risks remain for financial markets.

After a pause following a volatile trading pattern over the past few days, tracking the ebb and flow of news on the Ukraine border conflict, analysts have turned cautious amid Russia's military operation and said downside risks remain for financial markets over the coming days. 

The risk-off sentiment is set to dominate again as Western allies expand the list of sanctions.

"Clearly, the situation in Ukraine is incredibly fragile, and investors remain nervous that Russian authorities lay claim to broader areas of the Donbas than those currently held by rebels and potentially now by the Russian military. The market reaction to the first tranche of Russian sanctions has been relatively sanguine so far," said Chris Turner, global head of markets at ING.

"Following yesterday's muted sell-off, pessimism regained the upper hand yesterday, and US stocks fell more forcefully. Global financial markets have taken the first tranche of Russian sanctions in their stride. Yet the situation remains fragile," he added.