Jump to content

Risk-off moves intensify as Russia invades Ukraine

Recommended Posts

Russia’s invasion of Ukraine has sparked further volatility, hitting markets that were already under pressure due to higher inflation and rising interest rates.

BG_vladamir_putin_russia_234234.jpgSource: Bloomberg
 Chris Beauchamp | Chief Market Analyst, London | Publication date: Thursday 24 February 2022 

Ukraine invasion adds to market woes

For markets that were already grappling with a world of higher inflation and rising interest rates, the invasion of Ukraine comes as an additional shock.

Now, as well as thinking about how inflation will hit earnings and interest rates may affect economic growth, investors must consider how the breakdown in relations between Russia and the West, along with the imposition of sanctions, will affect the global economy. We are in uncharted territory, or at least experiencing something that has been quite rare in recent decades.

Next steps unpredictable

Wars are by their very nature unpredictable. The Russian intervention is on a scale not seen for a long time, but if it turns into a long occupation then the situation could persist for an extended period. Western sanctions will likely draw a Russian response, and with the Nord Stream 2 pipeline now off the cards European consumers face higher prices for their energy.

The broader geopolitical situation is likely to remain uncertain too. How long will the Russians stay in Ukraine? And will Putin follow up this move with more aggressive actions against the Baltic states? Europe and the US may also have to increase defence spending to meet the Russian threat, reducing the funds available for other activities.

How will this affect central banks?

Central banks as well will have to consider how the situation affects their plans to slowly raise rates. Rising oil and gas prices will drive inflation yet higher, and combined with the shock of the invasion a downturn in growth seems likely, potentially even leading to a recession in developed economies. Will the Federal Reserve, European Central Bank and others have to think about moderating their plans to raise rates, or even slow down their reduction of the size of the asset purchase programmes. Perhaps they may even look at keeping quantitative easing in place, to try and offset the shock to their economies.

For the time being we should expect more volatility across all asset classes. Equities look set for additional falls, although some stocks will rise thanks to higher commodity prices. But in other cases investors will expect earnings to fall, putting pressure on valuations. In the face of such uncertainty, the risk-off moves seem likely to continue.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
    • Total Posts
    • Total Members
    • Most Online
      10/06/21 10:53

    Newest Member
    Joined 02/10/22 20:33
  • Posts

    • Commodity Futures Market Summary: Elliott Wave Trading Strategies; US Gov Bonds 10 Yr Yields, US Dollar Index DXY, US Spot Gold, GDX, Silver, Copper, XLE Energy ETF, Crude Oil and Natural Gas Market Summary: The USD is expected higher in the trading sessions ahead, which in turn places pressure on any of the commodities that have been rallying over the last few sessions. I also take a look at most of the US Sector ETFs which are under a lot of bearish pressure, basically in line with the SP500 TRIAL Buy 1 Month Get 3 Months Video Chapters 00:00 US Sector ETFs 09:40 US Gov Bonds 10 Yr Yields 12:16 US Dollar Index DXY  17:40 GDX ETF /  US Spot Gold 20:02 US Spot Silver 23:19 US Copper / Lithium / Uranium / Nickel 29:36 Crude Oil. Sector XLE / XOM 32:53 Natural Gas 35:35 Thanks for supporting! Analyst Peter Mathers TradingLounge™ Australian Financial Services Licence - AFSL 317817 Source: tradinglounge com    
    • SP500 US Stock Bear Market: AMZN, AAPL, NVDA, TSLA, GOOGL, BRK.B, SQ, META, NFLX, ENPH, MSFT, BAC, JPM, GS. Elliott Wave Technical Analysis  Stock Market News: OPEC to consider oil cut of over than 1 million barrels per day Stock Market Summary Elliott Wave Count: Elliott Wave Analysis - (iii) of v) of 3 of (1) Analysis US Stocks: Tesla TSLA, Amazon AMZN, Nvidia (NVDA), Apple AAPL, Microsoft MSFT, Berkshire Hathaway (BRK/B),Block, Inc (SQ), Meta Platforms, Netflix (NFLX), Enphase (ENPH), Alphabet GOOGL. XFL Finance Sector ETF, JPMorgan JPM & Bank of America BAC, Goldman Sachs Group Inc (GS) Stock Market Trading strategies: Monday should follow Friday lower in the bearish weekly cycle. Holding short until Wave 3 for most stocks Video Chapters 00:00 SP500 02:11 Apple (AAPL) 03:18 NVIDIA (NVDA) 03:34 Amazon (AMZN) 05:00 Meta Platforms (META) 05:58 Netflix (NFLX)  07:23 Enphase (ENPH) 09:17 Tesla (TSLA) 10:20 Alphabet (GOOGL)  12:08 Microsoft (MSFT) 13:07 Berkshire Hathaway (BRK.B) 14:48 Block Inc. (SQ)  15:55 Banks JPM, GS 20:19 End. Thanks for supporting! Analyst Peter Mathers TradingLounge™ Australian Financial Services Licence - AFSL 317817 Source: tradinglounge com    
    • Dow daily Nothing new on the eastern front But maybe a bounce?        
  • Create New...