By James Saft
(Reuters) – Rising tensions between Russia and the West are doing what central bankers can’t or won’t: scare investors.
Global stock markets fell for a third straight session on Monday, driven in substantial part by rising tensions after the downing of a civilian airplane over Ukraine.
The U.S. blames the destruction of a Malaysian Airlines jet on pro-Russian fighters armed by Russia, and EU and U.S. officials are threatening stronger sanctions on Russia, contributing to a spike in volatility and a fall in most risky assets.
Contrast that to the mild reaction to a rare and specific warning last week from Fed Chair Janet Yellen about debt markets and social media and biotech shares. Or, for that matter the relative unconcern investors have displayed about the Banco Espirito Santo mess, which threatens the patched-together consensus about how best to buttress Europe’s banks.
We suddenly have a source of volatility in what has been an exceptionally placid landscape.