Risk-Off Sentiment Rattles Market Resilience
The intense uncertainty around the Russia-Ukraine crisis continues to unsettle the markets. Whilst some traders eye tempting ‘buy-the-dip’ opportunities, the general mood seems to be that the storm has not yet passed.
The most immediate effect from the situation in Ukraine appears in, of course, RUB. Following the fierce invocation of international sanctions against Russia, the ruble has slid 46% against the dollar in the last week. Unsurprisingly, as the list of companies exiting Russia continues to grow, the doors of the Moscow Stock Exchange remain shut.
Moreover, global commodities markets are also feeling the pinch from the threat of sanctions and long-term supply disruption. Brent crude hovers just shy of $120 per barrel after Ukrainian President Volodymyr Zelensky called for a Russian oil embargo over the weekend. Meanwhile, the rocketing of wheat futures indicates that upcoming CPI reports are likely to reflect squeezed food prices.
Further afield, the crisis has reverberated deeper in the markets and generally suppressed risk assets. In particular, Wall Street indices have struggled to provide a convincing rally beyond temporary reversals. The crypto market also remains trapped in a sideways trend.
This week brings an interest rate decision from the European Central Bank on Thursday, followed by US CPI data. No doubt these economic indicators will only amplify market jitters as war rumbles on Ukraine.