NEW YORK (TheStreet) -- Global equities tumbled Monday as investors began pricing in a potential military conflict between Russia and Ukraine.
There has yet to be any violence, but reports have stated that Russia's Black Sea fleet gave Ukrainian forces in Crimea orders to surrender or face a military assault.
Ukraine denies any threats have been made by Russia, but does acknowledge that over the weekend Russia was building up armored vehicles near the Crimean border after Russian President Vladimir Putin declared he had the right to invade the country to protect Russian interests.
The West has repeatedly warned Putin that any act of war would not be tolerated, but it looks as if Putin is only in the business of protecting his self-interest with this matter, leaving global markets vulnerable.
Fear builds, pushing safe-haven assets higher.
Initial reaction to the news of a Russian invasion drove bids higher on SPDR Gold Shares (GLD), iShares 20+ Year Treasury Bond (TLT) and iPath S&P 500 VIX ST Futures ETN (VXX) as investors sought out safety and fled assets with exposure to the region.
Investors underestimated how quickly tensions could escalate within the region, but after Russia's invasion this weekend, the market received a wakeup call and reallocated funds towards safer assets.
Expect safe-haven assets to remain in demand as long as risk of war exists in Ukraine.
Russian assets tumble
Market Vectors Russia ETF (RSX) fell 7% on Monday, while the Russian ruble fell to a record low against PowerShares DB US Dollar Index Bullish (UUP) as investors fled Russian assets due to potential conflict with the West.