Tensions between Russia and the U.S. escalate, causing global markets to be affected as Putin raises the possibility of a nuclear strike.

• According to Tass, Vladimir Putin has modified Russia's nuclear doctrine, specifying the circumstances that would trigger Moscow to utilize its nuclear weapons.
• Investors took cover in safe-haven assets amid declines in global stocks.
• "Tiffany McGhee, CEO and CIO of Pivotal Advisors, stated on CNBC's "Worldwide Exchange" that the conflict is intensifying and she anticipates an immediate, impulsive response."

On Tuesday, global markets reacted to escalating tensions between Russia and the U.S., causing global stocks to fall and investors to seek refuge in safe-haven assets.

The European stock index dropped by nearly 1% at 12:23 p.m. London time, reaching its lowest level since August. Meanwhile, U.S. stock futures tied to the Dow Jones Industrial Average fell 0.5%, S&P futures slid around 0.2%, and Nasdaq 100 futures lost 0.1%.

According to Tass, Russia's nuclear doctrine has been updated by President Putin, specifying the circumstances under which Moscow would use its nuclear weapons.

Russia has broadened the conditions under which it will respond with nuclear retaliation to include a significant attack on its territory, enemy aircraft, missiles, and drones crossing its border, and an attack on its ally Belarus, according to Tass.

Safe-haven markets saw prices rise by 0.8% at 11:52 a.m. London time as the prospect of a potential nuclear escalation loomed. In currency markets, the rose 0.7% against the euro and 0.36% against the U.S. dollar at 12:26 a.m. London time. Meanwhile, the Swiss franc added 0.3% against the euro.

Erik Nelson, Wells Fargo's Macro Strategist, noted the sharp drop in bond yields and USDJPY, but what he found even more telling was how quickly it faded.

"As the year comes to a close, there is still a preference for higher inflation and strong growth. Market participants will likely remember the headline risk from the early stages of the Russian-Ukraine war and will be more likely to hold onto any dips in yields and USDJPY if any signs of escalation remain verbal."

Moscow had previously expressed interest in updating its nuclear doctrine, but the amendments are being implemented immediately after the U.S. decided to allow Kyiv to use American-made long-range missiles in Russian territory, which is a significant shift in Washington's policy on the war in Ukraine.

"Tiffany McGhee, CEO and CIO of Pivotal Advisors, stated on CNBC's "Worldwide Exchange" that the conflict is intensifying and she anticipates an immediate, impulsive response."

Although she emphasized the importance of examining the market impact in the long run, she pointed out that similar short-term reactions have occurred since Russia's invasion of its neighbor in February 2022.

"Although it's been three years since the conflict began, the initial spikes in prices have stabilized," she stated.

Despite the possibility of a confrontation between two of the world's largest crude producers, oil markets, which have been most directly affected by the war following Western sanctions on Russian oil supplies, remained in negative territory on Tuesday.

The Ice with January expiry was down 0.37% at 12:33 a.m. London time, with front-month December futures lower by 0.74%, both compared with the Monday settlements.