Markets react to Putin on the march

Stocks and commodities react to news of a Russian invasion of Ukraine

2/28/22

Russian stock market closes to avoid a collapse

All is quiet on the western front as the world waits and watches the next moves of Russia’s Putin in his quest to conquer Ukraine. Russian ground forces began moving into Ukraine on Thursday and various battles have continued to rage throughout the eastern part of the country. The Russki’s have their eye set on Ukraine’s capital, Kiev, and are said to desire overthrowing Ukraine’s current government and installing their own. Peace talks between the two countries have reportedly gone nowhere. As of today, the Russian Ruble as valued against the U.S. dollar stands at its lowest level on record. The Russian stock market has also taken a tremendous hit due to international sanctions and is down significantly since the start of the conflict. The Russian stock market remained closed today in an effort by Moscow to avoid a total collapse.

U.S. markets remain volatile as investors wait on Putin’s next moves

U.S. markets have also been volatile the past few days as investors gauge the long-term potential threats of a Russian invasion. The move marks a serious geo-political shift in the former Soviet states. No one knows Putin’s next moves and whether or not they include invading other surrounding countries in an attempt to restore the former glory of the Soviet Union, of which Putin was a KGB agent and devout Commie. The S&P and Dow indices closed lower on the day while the tech heavy Nasdaq and small cap Russel indices closed a little higher.

Elon to the rescue

If those in Ukraine were worried about cyberattacks and internet blackouts, then fear no more, Elon Musk is here to stave off another potential international crisis. Old Elon always seems to find time away from his busy schedule to put his extraordinary plans into play and maybe even get a little PR while at it. Most notably a few years back when school children in Thailand were trapped in a flooded cave, Elon concocted a plan to build a mini submarine to rescue them. The plan, however, was thwarted by a British rescue diver who Elon then called “paedo guy”. Elon is a true believer in the saying “never let a good crisis go to waste”. Musk reportedly provided Ukraine his satellite-based internet service, Starlink, after Ukraine’s Vice Prime Minister requested it personally. Starlink is advertised as a solution to areas where internet coverage is unreliable or unavailable.

Invasion sends commodity prices soaring

Commodity prices have reacted to the invasion bullishly, as is no surprise. WTI crude oil has spiked recently, with the Apr 22 contract even testing the $100 per barrel mark. Russia competes with the U.S. and Saudi Arabia as the three largest oil producers in the world and the Ukraine tension will continue to spill over in the energy markets. Not only are large parts of the world now forced to go elsewhere for their crude oil, after Russian sanctions, but logistics in the Black Sea are now challenged. The price of gold has also risen dramatically. On the day of the invasion (2/24/22) the gold Apr 22 contract tested a high of $1,976 before selling off in a similarly dramatic fashion. Since then the price has recovered and the contract has currently found support around the $1,900 level. Russia is also the world’s largest exporter of wheat and Ukraine is a key exporter of corn to China. Both countries play a critical role in the world agriculture supply chain. Buyers have flocked into the grain markets the past few days and prices have been extremely volatile, with the markets testing their daily limits in both directions. Though the market sold off on Friday violently before the weekend, the bull has since reared his head and the buying continued today, with corn, soybeans, and wheat all up substantially.

-Jimmy Bear