Russia has boosted its military presence in Ukraine, specifically in Crimea, following the ouster of pro-Russian president Viktor Yanukovych and the installation of a new interim government. Ukraine's new leaders accused Russia of declaring war.
Kathleen Brooks, a research director at FOREX.com, said Putin's apparent backpedaling is restoring some calm in the markets.
"There has been a distinct change in the tone of the markets today as the Russian-Ukraine crisis stabilizes. The latest headlines suggest that Putin has had a change of heart," she said. "Putin is still trying to save some face after this situation dramatically backfired on him."
The U.S. has already suspended trade and investment talks with the Russian government, in the first of potentially many moves intended to force Russia to keep backing away from Ukraine.
But investors know the crisis is not over yet.
"The situation in Ukraine is far from off the radar and remains a potent wild card," said Ilya Spivak, a currency Analyst at DailyFX. "Deeper escalation of tensions remains a clear possibility."
The Ukraine standoff and Russia's slowing economy led traders to pull out of the ruble, sending the currency down more than 10% so far this year. The currency mostly recovered Tuesday.
And while experts say Russia is unlikely to halt oil exports, since the country depends on the revenue, traders pushed global oil prices up by nearly $2 a barrel Monday. Oil prices cooled Tuesday.
Global grain prices have also increased over concerns that political turmoil could disrupt Ukraine's grain trade.
How Ukraine crisis affects your money
Stock market trading volume in Moscow on Monday was nearly four times higher than normal and foreign exchange trading volume was double the market's daily average, hitting 1.7 trillion rubles ($47 billion), according to the Moscow Stock Exchange.
Market volatility led Russia's central bank to hike interest rates Monday in an attempt to insulate the economy against inflation risks and further swings.