The Current Situation
Russian forces have now attacked Ukraine, launching missiles, artillery fire, and air strikes. Ukraine and its Western allies have described the current situation as a full-scale invasion. This crisis is expected to have a mounting human and global security cost and has also roiled financial markets.
- The current situation has precipitated greater “risk-off” sentiments in financial markets, with risk assets in particular hit hard. Global stocks and equity futures have been negatively affected, while safe havens such as sovereign debt have seen greater investor inflows.
- The flight to safety saw the 10-year US Treasury yield touching 1.86% early in the trading day.
- Commodities prices have surged, with Brent crude climbing to over US$105 for the first time since 2014.
- The effect of the invasion started out as a global story for markets, with the S&P 500 Index initially declining 2.3%, the S&P/TSX Composite Index down 1.5%, and the FTSE 100 Index down 2.6%. However, as the trading day in North America and Europe progressed, the story shifted to become more regional, with the S&P 500 Index recouping its morning losses and the Dow Jones Industrial Average and Nasdaq Composite Index making gains during the day. However, the FTSE 100 Index declined 3.7% for the day. Mega-cap tech stocks have started a recovery process, favoured by investors as a proxy for safety.