Market shake-off after Russia begins ‘full-scale’ invasion of Ukraine
The Ruble, with no surprise, is having an extremely volatile session, currently down 5%, having hit an all-time low against the Dollar and Euro on the prospect of further Western sanctions.??At one point early-morning, the fall was over 10%. The currency has since halved the losses, likely helped by Russia’s central bank announcing that it would start interventions in the FX market to limit the currency volatility. The RTS Index, with includes the largest Russian stocks, is down 34% and has almost halved during the last 5 trading sessions.
The Dollar edged up, together with the Japanese Yen and Swiss Franc, given their status as safe-haven currencies. Gold, another asset normally performing well in case of deteriorating risk sentiment, is up 1.7% at $1’946, the highest level since January 2021. On the other hand, GBP & EUR and other risk-on currencies (such as CAD, AUD and SEK) moved lower in reaction to the escalation of the situation.
Brent has risen to $104 (+6.8%), the highest level since 2014. An oil supercycle seems inevitable, as global spare capacity has shrunk considerably, limiting the cushion against geopolitical crises that trigger further potential disruptions in the supply chain. Russia is the world’s third-largest producer of crude oil and the largest supplier of natural gas to Europe. Gas prices have also significantly jumped as tension escalates in eastern Europe.
There are big losses also in the equity market, with the sell-off starting in Asia and spreading into Europe. European indices are deeply into the red, with losses averaging 3%.
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The VIX index, a common measure of volatility in the equity market, has soared to 36, jumping by c.16% since yesterday.
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