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Why an aggressive Russia scares markets most

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Worries that tensions between Russia and Ukraine could escalate into a military conflict sent stocks spiraling lower and could continue to hang over the market.

Stock futures turned lower Wednesday after reports of weak German factory orders and a surprise 0.3 contraction in Italian GDP shifted focus back to the sluggish European economy. The markets had been jittery early Tuesday on reports that . But an afternoon news wire headline quoting the Polish foreign minister drove stocks even lower, as traders focused on his warning that Russia is poised to invade and pressure Ukraine.

"Ironically, here we are on the anniversary of the First World War, and the focus on how these things start is very much on peoples' minds," said David Ader, chief Treasury strategist at CRT Capital.

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Ader said the buying picked up in Treasurys Tuesday after the Bloomberg headline crossed, as the comments from Polish foreign minister Radoslaw Sikorski gave urgency to the earlier reports. Ader said some of the buying was driven by investors leaving risk asset, like high-yield corporates.

"Is it just pressure on Ukraine or is it an invasion of the Ukraine? Is it deeper sanctions that have repercussions for Russia and the entire world?" Ader asked. Traders said events currently simmering in the Middle East and the Russian-Ukraine conflict, which have pitted the U.S. and Europe against Russia, have the most power to unhinge markets.

Georgetown professor Angela Stent said that while Russian President Vladimir Putin was not expected to move troops into Ukraine, he would if he felt it was politically expedient.