Risk Aversion Sweeps Markets As Ukraine Crisis Grows

Risk Aversion Sweeps Markets As Ukraine Crisis Grows

Friday 25th February 2022 – 09:15 (GMT)

Risk aversion swept across global markets following Russias military operations within the Ukraine. Leaders throughout the globe have been quick to condemn the move by Russian President Vladimir Putin, with many imposing sanctions against Russia in response.

UK Prime Minister Boris Johnson outlined what he called “the largest and most severe package of economic sanctions that Russia has ever seen” in parliament yesterday. Limits on deposits held in UK banks, exports and also the seizure of assets linked to Vladimir Putins administration were outlined in the 10-point sanction plan.

European leaders have gone even further – with travel bans and increased sanctions against a wider-reaching set of individuals linked to President Putin. The Russian government is now restricted to raise money on EU financial markets, whilst there is also debate on whether or not to kick the country out of the SWIFT payment network.

President Joe Biden ordered a further 7000 US troops to be deployed to Germany following his statement condemning the hostilities abroad. He said the US would not engage Russia in the Ukraine, but would if their army stepped foot into NATO-controlled territories.

All this led to USD strengthening by 2.5% and billions being wiped off global stock markets as concerns of a wider war loom heavy. The energy sector was also affected – oil surged above $105 for the first time since 2014 and gas prices increased 62%, with question marks hanging over European supplies.

There have been some signs of recovery as the conflict looks increasingly likely to be contained within the Ukraine, however implied volatility is expected to remain high whilst the fighting continues.