In The Russian-Ukraine War, Is the Stock Market Falling Down?
If you are very conversant with what is happening around the world, then you should have heard of the Russian-Ukraine war. The war has been on for quite a while now with different companies and people trying to protest against the act. Some companies are already saying goodbye to Russia due to their act of war and others are planning to follow suit if the war persists. This means the economy of Russia, as well as the stock market, will be affected.
As there is no end in sight in the Russia-Ukraine invasion, the rise in the price of oil has led to the crash course of the stock market. Due to the current war, the ban on the importation of Russian oil and gas has made various commodities prices rise. Raw materials like wheat, metals e.t.c have upped. With the current occurrence, the stock market has been turbulent.
As of Monday, Brent crude which is well known in world oil trading traded a barrel at $139 this has been the highest trade since July 2008. Also in Europe, the price of gas at wholesales has increased to 60% which is far above the record that was set on Friday. This 60% is equivalent to $381(350), in comparison to the price before the Russia-Ukraine invasion the price of oil was below E80.
The price of palladium cannot be overemphasized as oil and gas prices are not the only ones affected. With the current invasion, the price of palladium has increased to $3440 per troy ounce. To understand palladium better, it is used for catalytic converters. This device is fitted into car exhaust to emit harmful emissions. Russia is responsible for about 38% of the global percentage of Palladium production.
For some days now due to the rise in the price of oil and other commodities the stock market has been affected as investors are considering other trading options like bonds. The oil spike continues to rise and this has affected the United States of America. Recently in California, the oil price is about $5 (the highest price in the country) consumers are already shedding more money.
Due to uncertainty as no one knows what can happen over the weekend the aggressiveness of the Russian has been on the high rise. With the current prediction, if there is any peace talk coming, the ten years note yield may rise from 10 to 15 basis points, Nikit Shingari says.
The escalation of commodities is on the high rise due to military invasions. This has caused the price of the stock market to drop. Due to the heavy loss on the Asian market, the European stock exchange has significant losses also. For example, the German DAX index plums met 5% to 12438 points at the beginning of trading; this has broken the barrier of 13000 points, after which it recovers in the course of trading.
Similarly, the euro zone’s STOXX index slumped to 3.7% at the beginning of trading, followed by gains. Due to this instability, investors are moving to gold. For the very first time since the summer of 2020, the price of a troy ounce has increased to more than $2000.
As the price of commodities continues to rise there is every possibility inflation in the eurozone will also increase to about 5% during this period. From the beginning of 2022, the European stock markets have dropped and with the Russian-Ukraine invasion, the stock market might continue to drop.
The government planned to support the country financially after the pandemic (as the pandemic has almost had a big crush on the country’s economy). But with the current happenings, it is facing a big challenge on its economy, which is cushioning the effect of high energy prices on consumers. The current state of the country has influenced lots of things which are energy taxes and Value Added Taxes. Higher cost of defense has to be carried by the government and green energy transition cost.
More fear of inflation has risen and more forecasts are being made by economists due to the rising in oil prices. And as Russia are well known as a large commodity exporter, many markets will be affected. Its major exports are crude oil and natural gas and Europe is one of their major customers. They are also exporters of palladium and wheat.
In the short run, uncertainties arise as no one knows what will happen next. There might be lots of falling rising in its economy. Russia may eventually be uninvestable for more than a year. Investing in Russia for the next one year will be at high risk.
The United States is well empowered to depend less on Russian energy. Europe will also find a way to get energy and depend less on Russia.
Other countries that are dependent on their commodities will have to find other ways to fend for themselves. Investors are also pulling out because of the high risk? The question now is, won’t the stock market have a large downturn in the current Russia-Ukraine invasion? says Nikit Shingari.
