On Monday, the prospect of a Russian attack on Ukraine quashed demand for riskier assets, bolstering the dollar, bolstering oil and bruisingbitcoin, as well as bolstering the dollar.
The US State Department said on Sunday it ordered diplomats' family members to leave Ukraine in one of the clearest signs that American officials are bracing for an aggressive Russian move in the region. US President Joe Biden weighed options for boosting U.S. military assets in the region to counter a buildup of Russian troops, with the New York Times reporting that Biden was looking at sending 1,000 to 5,000 troops to eastern Europe.
The Euro STOXX 600 fell 1.3% to its lowest since December 20, with indexes in London, Paris and Frankfurt falling between 0.8% and 1.5%.
Tech stocks fell 2.3% to their lowest since October, after Wall Street was pummelled by rising interest rates.
Analysts said investors were reluctant to pile back into equities rarely seen in the post- 2008 era of low interest rates and central bank-boosted liquidity.
According to Michael Hewson, chief market analyst at CMC Markets, Ukraine is front of mind at the moment. Buy-the-dip is the mentality for investors over the last 12 years. This is the first time in the last 12 years that I've felt that's not the default position to be in. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.7% and Japan's Nikkei fell 0.1%.
Wall Street looked set to rebound after last week's drubbing, with the S&P 500 futures and Nasdaq futures both up about 0.3%.
The MSCI world equity index, which tracks shares in 50 countries, fell by 0.3%.
Oil prices climbed again after five weeks in a row, to a seven-year peak on expectations that demand will stay strong and supplies limited.
In the Monday trade, the price of digital currency fell by as much as 5% to $34,551, not far from a six month low of $34,000 on Saturday. The price of the criptocurrency has lost half of its value since hitting a new all-time high of $69,000 in November.
Nerves over the Fed meeting on Wednesday added to the mix. The U.S. central bank is expected to confirm that it will soon start draining the huge pool of liquidity that has supercharged growth stocks in recent years.
Anxious markets are betting on a small chance that the Fed will hike rates this week, though the overwhelming expectation is for a first move to 0.25% in March and three more to 1.0% by the end of the year.
With inflation eye-wateringly high, the Fed is on course to remove the ultra-accommodative monetary policy that has been a key prop to stock prices for over a decade now, said Oliver Allen, a market economist at Capital Economics.
The prospect of higher borrowing costs and more attractive bond yields has taken a toll on U.S. tech stocks with their lofty valuations, leaving the Nasdaq down 12% this year and the S&P 500 nearly 8%.
Such was the scale of the losses that Treasuries actually rallied late last week on speculation that the bonfire of market wealth might scare the Fed into being less hawkish.
While Treasuries bounced late last week, 10 year yields are still up 22 basis points at 1.77% and not far from levels last seen in early 2020.
The rise has generally supported the U.S. dollar, which added 0.5% on a basket of currencies last week, and last stood up 0.1% at 85.647. Analysts at MUFG wrote that the dollar may derive wider support. Wednesday's meeting is likely to see continued hawkishness with the Fed being more concerned with inflation risks and showing determination to reverse monetary easing more quickly. Brent rose 83 cents to $88.72 a barrel, while U.S. crude rose 77 cents to $85.91.
Concerns about supply disruption increased in Eastern Europe, while OPEC and its allies struggled to raise output, according to analysts.