Every move of the situation in Russia and Ukraine affects the nerves of global financial markets.
On February 23, US stocks opened higher and moved lower. The three major stock indexes closed down more than 1.3% across the board, and the Nasdaq fell 2.57%, hitting a new low since May last year.
On February 21, Russian President Vladimir Putin announced in a national video speech that he recognized the self-proclaimed "Donetsk People's Republic" and "Luhansk People's Republic" of the Ukrainian civilian armed forces as independent countries, and signed the relevant presidential decree, the Russian army. According to this, he entered the two places to carry out the task of maintaining local peace.
Subsequently, many countries successively announced sanctions against Russia. In the game between Russia and the United States and NATO, the situation in Ukraine continued to be tense.
From the stock market to the commodity market, what impact will the Russian-Ukrainian crisis have on global markets?
Stock market: short-lived negative impact on the market
U.S. President Joe Biden said on Tuesday that the U.S. and its allies and partners decided to impose sweeping blockade sanctions on Russia's state-owned Development Bank (VEB) and military banks, which would prevent Russia from borrowing and raising funds in U.S. and European markets.
In addition, Biden also announced sanctions on Russia's elite and their families, and said that in cooperation with Germany, the "Nord Stream 2" project will no longer be advanced.
On Wednesday, local time, Biden officially announced the implementation of new sanctions against Nord Stream 2 AG, the company operating the Nord Stream 2 project, and its executives.
Biden said in a statement released on the same day that these steps are preliminary U.S. sanctions against Russia’s actions in Ukraine.
However, most Wall Street analysts expect that the Russian-Ukrainian conflict will continue to disrupt the market in the short term, and the negative impact of this crisis on the market may be short-lived.
Uncertainty is "very high" but the market is already adjusting accordingly, analysts led by Mike Wilson wrote in a research note on Tuesday.
So any relief could be good news for the market.
Morgan Stanley analysts expect: "If we see signs of easing in Russia/Ukraine tensions, a quick 5% rally doesn't seem out of the question."
Wall Street has been wrestling with how to deal with the Ukraine crisis.
Tom Lee of Fundstrat, a well-known Wall Street bull, said investors shouldn't sell stocks during a "panic" because stocks will rebound.
And billionaire investor Mark Cuban said overseas conflicts won't force investors out of the market because there are no better options for high returns.
Goldman Sachs predicts that the market could slide 6% if there is a direct conflict in Ukraine and punitive sanctions against Russia.
"Russia-Ukraine tensions are a 'low-risk' factor for U.S. corporate earnings, but central banks continue to focus on reining in," JPMorgan strategist Dubravko Lakos-Bujas wrote in a note on Tuesday. Amid inflation, volatility in energy prices could further dampen investor sentiment and corporate profit growth prospects."
“While the political situation between Russia and Ukraine has become increasingly unpredictable and market volatility is likely to increase in the near term, we believe that monetary tightening remains a key risk for U.S. equities as the Federal Reserve and central banks try to be proactive to re-stabilize inflation expectations.” JPMorgan expects.
Morgan Stanley noted that it will be important for investors to return to fundamentals once the Fed begins to tighten policy in March, "which should be the main driver of stock market returns in the coming months." They stressed that earnings growth will be particularly important, sales and operating margins are also important determinants of stock returns.
Crude Oil: Oil on track to hit $100?
Russia is a major exporter of oil and natural gas. According to CICC data, Russia's crude oil supply will account for 29% of Europe's total crude oil imports in 2021.
Oil prices rose sharply amid tensions between Russia and Ukraine.
As of the close on February 23, light sweet crude oil futures for April delivery on the New York Mercantile Exchange rose $0.19 to close at $92.10 a barrel, or 0.21%; London Brent crude oil futures for April delivery closed at At $96.84 a barrel, unchanged from the previous session.
On the evening of February 23, the main Shanghai crude oil futures contract hit 599.2 yuan/barrel, an increase of 1.54%, approaching the 600 yuan/barrel mark, a new high since the contract was listed.
Guotai Junan Futures analysis said that the risk premium of crude oil given by geopolitical events may drive the focus of oil prices to continue to increase. From the perspective of supply, Russia accounts for 10% of global supply and 7% of crude oil exports.
However, geopolitical risks mainly amplify the volatility of oil prices. Under high inflation, the market's forecast for the annual economic growth rate has been revised down. If the Ukraine crisis eases in the next 2 to 4 weeks, Iran will be lifted from sanctions and resumed crude oil exports (or 40-70 10,000 barrels per day of supply increment) is bearish, and the risk of a sharp correction in oil prices in the first half of the year cannot be ignored.
U.S. officials said the escalation between Russia and Ukraine was unlikely to lead to sanctions on energy supplies from Russia, Reuters reported.
In addition, if the conflict between Russia and Ukraine escalates, Russia's support for the German Nord Stream-2 natural gas pipeline may be frozen, which will also generate a premium for natural gas prices.
However, CITIC Futures believes that this possibility is small, because considering that Russia has recently increased its natural gas output to Germany, the impact may be short-term.
Kristina Hooper, chief global market strategist at Invesco, believes that oil could be affected by Russia’s invasion of Ukraine, especially if there is an extreme sanctions scenario.
Several factors, including a strong economic recovery, dwindling supply and geopolitics, have pushed oil prices higher, but it seems unlikely to last.
Fiona Cincotta, a senior analyst at Jiasheng Group, believes that oil prices are expected to hit $100 in the first and second quarters.
"Western countries condemn Putin's actions and impose sanctions on Russia, but they avoid the energy sector almost perfectly. Europe is highly dependent on Russia's energy supply, and about 40% of its natural gas is imported from Russia." Cincotta pointed out that German Chancellor Scholz The certification process for the Nord Stream-2 oil pipeline project was interrupted.
The market believes that Europe's fight against Russia can only go so far at best.
Putin said that Russia should continue to supply energy without interruption.
The remarks helped oil prices fall from session highs, but the crude oil market is of course also cautious.
In Cincotta's view, Russia may use natural gas or energy supplies as a weapon, which is a concern and a reality that cannot be ignored, and is a bullish price factor for the entire energy market.
While oil prices have retreated, a touch to $100 looks very likely unless the coronavirus situation eases significantly.
"Overall, we still believe that oil prices are expected to hit $100 in the first and second quarters, and the key is that crude oil inventories are at historically low levels. By summer, OECD inventories may fall to the lowest level since 2000." Cincotta said.
Gold: Big Divergence
Gold has always been considered a safe-haven asset. With the escalation of the situation in Russia and Ukraine, the international gold price has also risen to a high level, with the April Comex gold futures contract reaching as high as $1,918 per ounce.
As of 23:00 on February 23, Beijing time, the price remained above $1,900.
Edward Moya, senior market analyst at Oanda Corp, said: "The possibility of a local war appears high, which could keep inflationary pressures elevated for most of this year, and gold prices appear to be in a brief lull right now, but Investors are quick to say, 'I love gold' as geopolitical and economic growth concerns will drive safe-haven demand."
Wu Mengyin, an analyst at Topix Futures, pointed out that 2022 is a big year for geopolitics, and frequent disturbances will be the norm. From the perspective of fundamentals and event-driven factors, it is expected that gold will break through the previous high this year.
However, some analysts are more cautious.
Wang Xiang of Bosera Fund believes that geopolitical events generally have a pulse-like impact on gold, but the persistence is relatively poor.
Wang Xiang analyzed that the interest rate suppression in the gold market may be weakened, so although the boost to the geo-pulse is not expected to increase, the interest rate suppression in the overall gold market may weaken in the later period, which is conducive to the gradual progress of the gold price center. up.
In Wang Xiang's view, next, the US inflation data, the Fed's monetary policy adjustment expectations and progress, the European Central Bank's policy trend, the US dollar index and the trend of US bond yields and other factors will all affect the price of gold.
UBS analyst Joni Teves also said that despite the current geopolitical risk factors, looking ahead, the gold market is expected to refocus on macro factors: "The current environment is that real interest rates are rising and the Fed is tightening policy, which It does have a negative impact on the price of gold. We do think that the force [of the Russia-Ukraine crisis] should be short-lived in the end.” UBS expects spot gold prices to fall to $1,600 an ounce by the end of 2022.
Non-ferrous metals: aluminum, nickel inventories continue to decline
Russia is a major exporter of various industrial metals. The export volume of palladium ranks first in the world. It is also an important exporter of metals such as aluminum and nickel.
Tensions in Ukraine have also increased supply risks in the non-ferrous metals market.
According to statistics from Datayes!, the international aluminum price rose to the highest level in more than 13 years, and the main contract of LME aluminum futures once exceeded US$3,340/ton.
The most-traded nickel contract on the LME rose to $24,480 a tonne, after hitting $24,700 earlier, the highest level since August 2011.
Wang Yanqing, an analyst at CITIC Construction Investment Futures, pointed out that in 2021, Russia's primary nickel output will be about 146,000 nickel tons, of which refined nickel output will be about 121,000 nickel tons, accounting for about 5% of the global primary nickel ratio.
And Russian nickel is one of the main delivery products of Shanghai nickel.
Wang Yanqing analyzed that the impact of the current tensions between Russia and Ukraine is more emotional, so the impact on nickel prices is relatively small.
If the situation in Russia and Ukraine deteriorates again and Western countries impose sanctions on Russia, the nickel circulation in Russia will decrease, resulting in a further reduction in supply.
Chen Sijie of Huatai Futures said that the recent escalation of the conflict between Russia and Ukraine, if there is a military conflict between Russia and Ukraine, and more sanctions imposed by Europe and the United States, the impact on global aluminum supply will be huge, and the situation in 2018 may be repeated, resulting in sharp fluctuations in aluminum prices. And further disrupt the supply chain, affecting or even spilling over the aluminum market.
"Whether it is the restricted trade flow of Rusal sources, the cancellation of the registration of Rusal by the LME, or the further deterioration of the European energy crisis, these point to a point, that is, the global aluminum supply problem. The current aluminum market, short-term domestic It is difficult to quickly increase the supply, and the pattern of overseas shortages continues. Various factors have led to tight global aluminum supply in the short term. If the United States sanctions Rusal, it will further deepen the tight global aluminum supply pattern and form an effective support for aluminum prices. And upward drive." Guotai Junan Futures analyst Wang Rong said that if the situation in Russia and Ukraine further escalates, it will further strengthen the current "low inventory" pattern of the global aluminum market, forming an effective support and upward drive for aluminum prices.