The worst scenario has been confirmed: The war has begun. Yesterday, February 24, 2022, the Russian invasion of Ukraine began yesterday morning with attacks by land, sea and air.
This has happened after President Vladimir Putin declared the start of a “special military operation” to “demilitarize” Ukraine but not occupy the country.
From there, a day has closed with more than 200 attacks launched by Russia and a total of 57 people died and 169 were injured. It is estimated that 100,000 Ukrainians have fled their homes.
Beyond the human drama, fear has also infected the marketssome bags going down and others going up, while we saw unleashed energy markets.
Mixed stock market reactions
Yesterday we saw a disparate behavior in the different selective stock. In Europe we saw falls, the Stoxx 600 fell 3.28% reaching its lowest point since early 2022 and with banks falling more than 8% (down 10%, from their all-time high in January). Our Ibex 35 dropped 2.86%.
Nevertheless, the S&P 500 initially fell, before ending 1.5% higher, and the Nasdaq Composite recovered its earlier sharp declines to close 3.3% higher. Technology stocks soared and were responsible for much of the turnaround.
At the beginning of the session, the Nasdaq is down more than 20% from its November closing all-time high. So if he had closed at that level, it would have confirmed that he was entering a bear market.
To understand this disparate stock market movement we must understand what has happened in between. And it is that the markets picked up the words of President Joe Biden that he announced new sanctions against Russia in reaction to military action.
The president announced that US to impose sanctions on four of Russia’s largest banksas well as two financial institutions that the United States sanctioned earlier this week, meaning “all assets they have in the United States will be frozen.”
Energy markets: gas and oil soar
Concern has been picked up in the energy markets. European natural gas prices have risen by nearly 70% and oil has broken above $105 for the first time since 2014.
TTF-linked futures, the wholesale price of gas in Europe, rose up to 69% up to 142 euros per megawatt hour before the increase slows to 40%.
From Brent’s point of view, briefly rose as much as 9% to $105.79 a barrelalthough much of that progress was later left.
The Russian stock market and the ruble hit rock bottom
The war by Russia is not coming for free. And not only because of the consequences in the form of economic sanctions on the country and its business fabric that will be presented to it by the European Union and the United States.
If we look at their currency, the ruble has fallen almost 4%, reaching its historical minimum and reaching 0.01047 euros. The central bank also said it would start foreign exchange market interventions, with the aim of providing additional liquidity to the banking sector. It is the first currency intervention by the central bank since 2014, when Russia annexed Crimea.
The purchasing power of the ruble weakened coupled with potential economic sanctions will mean more inflation for a country that already had an inflation rate of 8%.
And your bag? The selective stock market of Russia, the Moex Russia Index, has ended the session with a fall of 33%erasing $189 billion of valuation on their companies.
With the previous sanctions, Russia could not be lent directly, but once the bond was issued, it could be purchased on the secondary market. If in September the Russian bond was trading at 7%, it has already exceeded 10%. A fact of little relevance due to the high income from oil and its low levels of debt.