Global stock markets could be affected by the ongoing conflict between Russia, Ukraine. Crude oil supplies will cause the most disruption, with prices reaching $100 per barrel, the highest level in seven years. This could cause a huge drop in demand which may lead to recession in some countries. The world is watching to see if Russia invades Ukraine and what sanctions NATO and the United States of America may impose, when necessary.
Invasion of Stock Markets
A disruption in oil supply could cause a surge in crude oil prices, which can lead to higher inflation and volatile financial markets. The stock market sell-off following Jake Sullivan’s announcement of an imminent invasion indicates how markets will react if one does happen. The history of financial markets shows that geopolitical conflicts are the most disruptive.
This exceptional article, which has 1,000,000 reviews and 200 hours of extensive research, gives an excellent account on how markets have reacted historically to conflicts. It also offers insights into what can be done in the future.
Since 2022, the S&P has fallen more than 7 percent. Recently, the Dow Jones Industrial Average lost more than 500 points. We saw a decline in stock markets in Europe as the FTSE 100 dropped by 1.7%. The Federal Reserve works to control consumer price increases. However, changes from overseas could negatively impact their efforts.
Chief Investment Strategist at CFRA Sam Stovall says equity markets are most vulnerable. The silver lining is that historically, the markets have been affected by geo-political events. Keith Lerner, CFRA’s Chief Investment Officer, states that “as long as you don’t drive yourself into recession”, then the markets tends to rebound. Mark Hulbert, MarketWatch, supports this sentiment, stating, “Indeed. The takeaway from past geopolitical crisis may be that it is best to not sell into panic.”
What does this all mean for investors?
An examination of history shows Lerner’s words have some truth. This is a crucial insight for investors. Truist Advisory Services conducted a thorough review of 12 historical events similar to the Iraq War of 2003 and the Cuban missile crisis in 1962. The S&P 500 saw an 8.6% average gain after nine of these events. This was more than the previous year.
This means that investors should not rush to act due to the possible situation between Russia, Ukraine. Regulated Trading Platform has shown that investors are anxious. There has been an increase in the number selling stocks to prevent big losses in the future. Sergei Lavrov, President of Russia is currently urging Vladimir Putin to consider diplomatic options that could lead to a deal. The stock market is still waiting for Putin’s decision, and the uncertainty has an effect on it. However, there is hope that the talks will happen.
The 100,000-strong Russian forces are currently in control of the Ukrainian border. However, they have not escalated their actions which could increase tensions. This threat exists, and financial markets will be affected until a decision can be made. Other than the negative impact on financial markets, other countries are encouraging their citizens to flee Ukraine for safety reasons.
While you might be looking to quickly recoup your investment, this is the perfect time to be patient and get a great long-term result.