The world’s stock markets are once again shaken by the escalation of the war between Russia and Ukraine. Oil soars and investors rush to buy safe assets, causing a rally in gold and the dollar.
Bad day for the bags and bad start to the week. Wall Street shows sharp declines in the pre-market. The Dow Jones falls 1.5%, the S&P500 falls 1.6% and the Nasdaq loses 1.7%.
With the current fall, the Nasdaq accumulates a decrease of more than 15% since the beginning of the year while the S&P500 falls more than 10%.
European stocks are also trading sharply lower on Monday. The Stoxx50, which brings together the 50 most important shares of the old continent, fell 3%.
The German stock market is the one that fell the most, with a decrease of 3.7%, followed by the Ibex35 of Spain and the CAC40 of France, which lost 2.8% and 2.7% respectively.
The war between Russia and Ukraine enters its 12th day, shaking stock markets as well as commodity markets.
Due to the sanctions against Russia, there is fear on the part of the market about the economic impact at a global level, while the rally in raw materials generates even greater fear about future inflation in the different economies of the world.
Due to fears about a disruption in the supply chain, oil prices soared. ANDBrent crude jumped 6.1% to $125.3 a barrel, the highest level since July 2008. In fact, in early Monday trading, Brent rose above $130 a barrel. The US equivalent, West Texas Intermediate (WTI), is up 6% at $122.
The market is reacting to supply disruptions stemming from Russia’s ongoing invasion of Ukraine and the possibility of a ban on Russian oil and natural gas.
Agricultural raw materials also rise. Soybean advances 1.8% and corn 2.9%.
Volatility is also skyrocketing. The volatility index in shares, VIX, rises to 32 points. However, where the greatest panic is seen is in the bond market, since volatility in that segment reaches its highest value since the worst moment of the pandemic.
On the other hand, and a little further behind, the volatility in the currency market also rises to its highest value since 2020.
fly to quality
Investors apply the strategy of fly to quality (jump to quality), amid growing uncertainty over the war. This is evidenced by the fact that, after a drop in stocks, hedging assets (insurance) tend to rise.
While stocks fall, the dollar Index rises 0.7% to 99.4 points. In this way, the dollar strengthens against the rest of the currencies and reaches its highest value since May 2020, a time of greatest tension over the coronavirus crisis.
Similarly, investors seek coverage in gold. The precious metal rises 1.5% and reaches US$ 2,000 again. This is its highest value since July 2020. In this way, it rises 10% so far this year.
The Chronicler-RIPE
