Investors shrug as tensions between Ukraine and Russia rise
Investors appear to have offered little more than a shrug of the threat of a military conflict in eastern Ukraine. This is surprising given the growing rhetoric from the Kremlin.
Russian troops began a series of military exercises near the Ukrainian border on Thursday less than a day after Russian President Vladimir Putin said NATO (North Atlantic Treaty Organization) should “go into action. hell, ”according to newspaper articles.
The comment comes as the United States and Russia have agreed to talks in the hope that all parties can avoid conflict.
Meanwhile, other reports also indicate that an increasing number of Russian troops stationed in western Russia have started to create burial sites, raising fears that a Russian invasion is imminent.
If such an invasion occurs, investors should expect stocks to fall, bonds to rally and oil prices to rise as investors take a risk stance, as reported earlier this month.
The FTSE 100 index, which tracks the UK’s largest state-owned companies, hit its highest level in the COVID-19 pandemic on Friday, indicating investors weren’t too worried about a military conflict on the fringes from Europe.
Likewise, oil markets have plunged into Asian trade, indicating that there are few concerns about disruptions in energy supply. Russia is the world’s third largest oil producer, behind the United States and Saudi Arabia. An invasion by Russia would almost certainly result in sanctions against American and European Russia, including the country’s energy companies. This is especially important because Russia is Europe’s largest energy supplier, supplying more than one in four barrels of oil. Again, the lack of response suggests little concern on this front so far.
The lack of worry may be linked to the holiday season with investors in Europe and the United States heading out for a long weekend in hopes of some time to unwind as another stressful year pulls in. its end.
Such a position can make sense on an individual basis – we all need our sanity – but it can also expose investors to an increasingly risky situation.