By Peter Nurse

Fxgecko.com -- European stock markets are expected to open sharply lower Tuesday, after Russian President Vladimir Putin ordered troops into eastern Ukraine after recognizing two breakaway regions as independent republics, taking the region to the brink of war.

At 2 AM ET (0700 GMT), the DAX futures contract in Germany traded 1.5% lower, CAC 40 futures in France dropped 1.1% and the FTSE 100 futures contract in the U.K. fell 0.8%.

Global stock markets have been on edge for the last week as tensions were ramped up on the Ukraine border. Putin’s decisions to recognise two breakaway regions in eastern Ukraine as independent and then deploy troops in what Moscow called a peacekeeping operation will prompt investors to shun risk, causing a broad-based selloff.

U.S. President Joe Biden followed Russia’s move by signing an executive order prohibiting trade with the so-called Donetsk People’s Republic and Luhansk People’s Republic regions of Ukraine.

Additionally, the United Nations Security Council held an emergency meeting late Monday in New York, and U.S. Ambassador Linda Thomas-Greenfield said the United States would unveil new sanctions against Russia on Tuesday.

European Union ambassadors meet Tuesday to discuss a plan for sanctions in response to Putin’s move, although it could take days to finalize a package.

Away from the Ukraine, investors will also focus on the release of Germany's Ifo business climate index later Tuesday. Positive signs of an economic recovery could encourage the European Central Bank to unwind post-pandemic stimulus faster than expected, although the uncertainty sparked by the situation in the Ukraine could stay the central bank’s hand.

In the corporate sector, HSBC (LON:HSBA) will be in the spotlight Tuesday after one of Europe’s largest banks reported pretax profit of $18.9 billion last year, up from the previous year's $8.8 billion, as expected bad loans from the Covid-19 pandemic failed to materialize.

The lender brought forward its key profitability target by a year and said it would buy back up to $1 billion of its own shares, after completing its existing $2 billion buyback program.

Oil prices soared Tuesday following Russian troops entering eastern Ukraine, raising the potential of a disruption of energy supplies if U.S. and European governments decide to impose oil or gas sanctions on Moscow as a consequence.

By 2 AM ET, U.S. crude futures traded 3.7% higher at $93.55 a barrel, while the Brent contract rose 2.1% to $94.48, having earlier Tuesday climbed to its highest level since September 2014.

Additionally, gold futures rose 0.7% to $1,913.40/oz, while EUR/USD traded 0.1% lower at 1.1302.