The ongoing tensions between Russia and Ukraine have impacted global economy, markets and every other sphere of life across the world. The morning of 24th Feb,2022 has witnessed a major fall in stock exchanges around the world due to Russia’s attack on Ukraine. Global markets usually weaken as wars approach and get back on track as the wars come to an end. This has been a historical pattern and it is likely to do the same this time.
President Vladimir Putin has already rattled stock, bond and commodity markets around the world. Even the Russian stock market has fallen by 14% this week. Chief Eurozone Economist Claus Vistesen quoted that energy prices will keep rising on account of war and the equities will keep falling. Since energy sector is not affected by this war, oil and gas prices are still increasing. Crude Oil prices have nearly approached a 100$ per barrel from 65$ per barrel a year ago.Not only crude oil but it will also affect natural gas prices as Russia is the main supplier of Natural Gas in Europe. It is the 2nd biggest producer of Natural Gas after the United States. Europe relies on Russia for around 35% of its natural gas mostly coming through pipelines.This war has also imposed new threats such as rising interest rates and sizzling inflation. Petrol and diesel prices will be in action once again. According to reports, inflation is already 7.5%, i.e at a 40 year high in the United States.This war can drag the markets more down and oil prices can witness a new high due to that.
Black sea region is the main route for the distribution of wheat and other grains. Any disruptions in this region will have a major impact on the costs and impactthe fuel food inflation at a time when affordability will be a key concern worldwide following the economic damage caused by the COVID-19 pandemic.
The Indian stock market has also took a heavy beating over the last few weeks due to this war. Sensex and Nifty have dropped by almost 5% which is the highest since Covid-19. There is panic and chaos among investors but honestly this war can be a great opportunity to make investments as markets usually recover and bounce back from such war like situations. Long- term investors with a well-diversified portfolio of stocks and bonds will still be able to outrun this crisis.