Russia-Ukraine conflict: first news
Posted: Wed Dec 11, 2024 10:56 am
On the night of February 23-24, 2022, Russia attacked Ukraine, sparking the Russia-Ukraine conflict. The worst-case scenario has come true. The attack comes after separatist leaders in Ukraine's eastern republics asked Putin for military assistance. Ukraine, for its part, had said it had no intention of invading the separatist regions.
Putin, in a televised speech in the evening, accused the West of ignoring the guarantees that had been requested and of overstepping the red line of NATO expansion to the east. Russia's goal would be to "demilitarize Ukraine." According to this approach, missile attacks would target the military.
Russia’s defence minister has denied indiscriminate attacks on civilians, saying the targets are military infrastructure and air forces being attacked with “high-precision weapons”. Russian troops have also apparently landed in the Black Sea port cities of Odessa and Mariupol. Ukrainian President Zelensky has asked his Security and Defence Council to declare martial law.
Table of Contents
What's happening with the financial markets?
Russia-Ukraine conflict: implications
War and the stock markets
What happened with other similar situations?
What's happening with the financial markets?
As for financial markets, the Russian stock market has fallen sharply, by almost 50% at one point before recovering some ground.
Over the past few hours, the ruble has been trading above 100 rubles spam phone number data per Euro. In recent years, the ruble has been steadily losing ground against the Euro and the Dollar. Just a year ago, the exchange rate was around 60 rubles per Euro. Of course, there are many factors to consider and any assessment at this stage could be premature.
he Western response is expected today, but so far it has been inadequate and lacking in unity. Initial comments from Western leaders are so far few in number. Europe in particular, which is already in the midst of an energy crisis, is currently having a problem with imposing heavy sanctions because it is dependent on Russian gas.
In this context, the position of China is crucial. It has kept a low profile so as not to damage relations with Europe too much, but is substantially on the side of Russia and has accused the United States of fuelling tensions. In recent days, Beijing has declared itself against sanctions against Russia.
Russia-Ukraine conflict: implications
It is very difficult to assess all the implications without knowing the scope of this war. We can, however, glimpse the first short-term consequences. This situation could have repercussions on inflation. Commodity indices are substantially higher this morning. Indeed, on the one hand, Ukraine is a major producer of agricultural products, while Russia is a producer of energy products. Of course, the markets will immediately start to assess how the war situation fits in with the other big issue, the already announced monetary restriction that the central banks will soon begin.
In this sense there are two opposing forces:
On the one hand, large-scale military confrontation could be a reason for caution for central banks.
On the other hand, this could lead to higher inflationary pressures through higher energy prices.
It is not easy to see the implications of all this for central banks' reactions, as the situation is still developing.
Caution is likely to prevail with monetary tightening measures.
Download 7 long-term profitable investments
War and the stock markets
As always, we advise our clients to stay the course and not worry about the headlines. Our portfolios are designed to weather these extreme events as well. Making rash decisions and letting emotions get the better of you is the worst option in these cases and can undermine the achievement of your long-term goals. We recently wrote about why you should continue investing when markets are down . It's harder to say it again today, but no less valid.
History shows us that the relationship between war and financial markets is somewhat contradictory. Some argue that the growth of modern financial markets is a consequence of war. When countries have had to raise huge sums of money to finance battle, this has stimulated the development of large financial centres so that they could sell war bonds at astronomical interest rates.
What happened with other similar situations?
As a guide (but bearing in mind that history is never the same) we include a table showing the market's behaviour in previous war episodes compared to the Russia-Ukraine conflict.
Main war conflicts
You can find many other tables that are circulating these days about major events, including wars and the markets: you will see that they all agree on one thing: after a few months the situation is positive.
Without going any further, it could be argued that just two years ago we went through an extremely complex situation such as the COVID-19 health crisis . Some compare it to a global war caused by a virus.
Looking at the chart again of the performance of the main indices for that same year will probably help us remember that we will also get through this situation.
Bloomberg during the Russia-Ukraine conflict
Source Bloomberg
Both the MSCI World and the S&P 500 fell by just over 30% to end the year with a gain of around 15%. This is the nature of stock markets. In the short term they are volatile, especially in the face of unforeseen situations, while in the long term they have a natural upward tendency.
Putin, in a televised speech in the evening, accused the West of ignoring the guarantees that had been requested and of overstepping the red line of NATO expansion to the east. Russia's goal would be to "demilitarize Ukraine." According to this approach, missile attacks would target the military.
Russia’s defence minister has denied indiscriminate attacks on civilians, saying the targets are military infrastructure and air forces being attacked with “high-precision weapons”. Russian troops have also apparently landed in the Black Sea port cities of Odessa and Mariupol. Ukrainian President Zelensky has asked his Security and Defence Council to declare martial law.
Table of Contents
What's happening with the financial markets?
Russia-Ukraine conflict: implications
War and the stock markets
What happened with other similar situations?
What's happening with the financial markets?
As for financial markets, the Russian stock market has fallen sharply, by almost 50% at one point before recovering some ground.
Over the past few hours, the ruble has been trading above 100 rubles spam phone number data per Euro. In recent years, the ruble has been steadily losing ground against the Euro and the Dollar. Just a year ago, the exchange rate was around 60 rubles per Euro. Of course, there are many factors to consider and any assessment at this stage could be premature.
he Western response is expected today, but so far it has been inadequate and lacking in unity. Initial comments from Western leaders are so far few in number. Europe in particular, which is already in the midst of an energy crisis, is currently having a problem with imposing heavy sanctions because it is dependent on Russian gas.
In this context, the position of China is crucial. It has kept a low profile so as not to damage relations with Europe too much, but is substantially on the side of Russia and has accused the United States of fuelling tensions. In recent days, Beijing has declared itself against sanctions against Russia.
Russia-Ukraine conflict: implications
It is very difficult to assess all the implications without knowing the scope of this war. We can, however, glimpse the first short-term consequences. This situation could have repercussions on inflation. Commodity indices are substantially higher this morning. Indeed, on the one hand, Ukraine is a major producer of agricultural products, while Russia is a producer of energy products. Of course, the markets will immediately start to assess how the war situation fits in with the other big issue, the already announced monetary restriction that the central banks will soon begin.
In this sense there are two opposing forces:
On the one hand, large-scale military confrontation could be a reason for caution for central banks.
On the other hand, this could lead to higher inflationary pressures through higher energy prices.
It is not easy to see the implications of all this for central banks' reactions, as the situation is still developing.
Caution is likely to prevail with monetary tightening measures.
Download 7 long-term profitable investments
War and the stock markets
As always, we advise our clients to stay the course and not worry about the headlines. Our portfolios are designed to weather these extreme events as well. Making rash decisions and letting emotions get the better of you is the worst option in these cases and can undermine the achievement of your long-term goals. We recently wrote about why you should continue investing when markets are down . It's harder to say it again today, but no less valid.
History shows us that the relationship between war and financial markets is somewhat contradictory. Some argue that the growth of modern financial markets is a consequence of war. When countries have had to raise huge sums of money to finance battle, this has stimulated the development of large financial centres so that they could sell war bonds at astronomical interest rates.
What happened with other similar situations?
As a guide (but bearing in mind that history is never the same) we include a table showing the market's behaviour in previous war episodes compared to the Russia-Ukraine conflict.
Main war conflicts
You can find many other tables that are circulating these days about major events, including wars and the markets: you will see that they all agree on one thing: after a few months the situation is positive.
Without going any further, it could be argued that just two years ago we went through an extremely complex situation such as the COVID-19 health crisis . Some compare it to a global war caused by a virus.
Looking at the chart again of the performance of the main indices for that same year will probably help us remember that we will also get through this situation.
Bloomberg during the Russia-Ukraine conflict
Source Bloomberg
Both the MSCI World and the S&P 500 fell by just over 30% to end the year with a gain of around 15%. This is the nature of stock markets. In the short term they are volatile, especially in the face of unforeseen situations, while in the long term they have a natural upward tendency.