What Is The Global Market Impact Of The Ukrainian Crisis?

What Is The Global Market Impact Of The Ukrainian Crisis?

The Impact of the Russia-Ukraine Conflict on Global Markets

Fears of a Russian invasion of Ukraine have thrown stock markets around the world into a tailspin.

The potential of a conflict in Ukraine shook global markets, sending prices plunging as investors fled the market in terror.

So, how are the world's stock markets doing, and what can we expect in the next days?

Markets in the United States

On the 28th of January, Wall Street stocks rose substantially at the end of a stormy week, as many investors weighed the possibility of rapid interest rate hikes as a result of Apple's upbeat earnings report.

The S&P 500 index in the United States surged 2.4 percent late in the day, erasing a 0.8 percent loss earlier in the day. The rise was enough to push the index into the red for the week, snapping a three-week losing streak.

The Nasdaq Composite Index gained 3% this week, just beating out a weekly gain of 1%. Both indices have been tumultuous in recent trading sessions, with intraday swings this week driving volatility indicators to their highest levels since October 2020.

Markets Not Listed

Concerns about Fed rate hikes and escalating geopolitical tensions over Ukraine have thrown global asset markets into chaos. In the currency market, the dollar climbed despite a small reduction in Treasury rates.

European stock markets plummeted, with the Stoxx 600 index in Europe down 1%. The Nikkei 225 index in Tokyo jumped 2.1 percent, while the Hang Seng index in Hong Kong dipped 1.1 percent.

Conclusion

Inflation is at a multi-decade high, and rate hikes are expected, wreaking havoc on bond markets, with US 10-year rates hanging around 2% and German 10-year yields surpassing 0% for the first time since 2019.

Investors generally return to bonds when the economy's future is uncertain. However, if tensions between the two continue, energy markets may suffer. With the Nord Stream pipeline connecting Germany and other European countries via Ukraine, Russia now supplies around 35% of Europe's natural gas.

Many additional factors are influencing the global economy right now, including COVID-19's persistence, supply-chain shocks, inflation fears, the Federal Reserve's announcement of interest rate hikes, and economic inequality, in addition to the Ukrainian situation.