ANALYST VIEW-Escalating Russia-Ukraine crisis ripples through markets

0
31


LONDON, Feb 22 (Reuters) – Inventory markets tumbled on Tuesday
whereas bonds and commodities rallied after Russian President
Vladimir Putin ordered troops into the breakaway areas of
japanese Ukraine.

Under is response from analysts and asset managers to the
newest occasions:

ELSA LIGNOS, GLOBAL HEAD OF FX STRATEGY, RBC CAPITAL MARKETS

“The short-term market response will rely upon the extent of
sanctions imposed by the West. Western leaders have two choices
– a ‘modest’ strategy, making an attempt to sign de-escalation (what
markets ‘need’ to see) or a firmer strategy, recognising that
permitting Putin to dismantle Ukraine piece by piece will nonetheless
obtain his finish objective, over an extended timeframe.

“EU ambassadors are assembly immediately to debate their plan for
sanctions…The U.S. response might be extra essential. This
boils down as to whether that is termed ‘an invasion’ or not.
Blinken remains to be scheduled to fulfill Lavrov in Geneva on
Thursday.”

MARK HAEFELE, CHIEF INVESTMENT OFFICER, UBS GLOBAL WEALTH
MANAGEMENT

“Whereas we imagine it’s too early to make a closing evaluation
on what Monday’s occasions could imply for the course of occasions, we
stay of the view that the extreme threat case we described
earlier — together with combating and a chronic interruption of
Russian vitality exports — nonetheless represents a tail threat at this
stage.

“Allocations to commodities and vitality shares are an
engaging choice to assist buyers hedge portfolio dangers.
Vitality costs would doubtless rise within the occasion of an escalation
round Ukraine, in addition to if cooler heads prevail amid rising
demand and considerably constrained provide.”

DUBRAVKO LAKOS-BUJAS, CHIEF EQUITY MARKETS STRATEGIST,
JPMORGAN

“Whereas the trail of Russia-Ukraine disaster stays unclear
with doubtlessly elevated market volatility within the short-term,
tightening financial coverage, in our view, nonetheless stays the important thing
threat for equities as central banks try and aggressively
re-anchor inflation expectations decrease.

“Overly restrictive financial coverage may end in an
outright coverage error particularly if the enterprise cycle continues
to deteriorate. On the similar time, the Russia/Ukraine disaster
may drive a reassessment of the Fed tightening path ensuing
in central banks turning much less hawkish, whereas policymakers could
think about extra fiscal stimulus.”

LEE HARDMANN, CURRENCY ANALUST, MUFG BANK

“The developments have supplied a significant blow for any
remaining hopes for final minute diplomatic resolution to keep away from
battle within the Ukraine, which can certainly be even more durable to
keep away from now after Russia selected to blatantly disregard the Minsk
settlement.

“There may be now a considerably greater threat that tensions will
proceed to escalate within the area triggering a sharper sell-off
for the rouble and inserting extra downward strain on different
European currencies, that ought to enhance the relative attraction of
the U.S. greenback.”

SEAN DARBY, GLOBAL EQUITY STRATEGIST, JEFFERIES

“While the escalation in tensions is unwelcome, it’s
unlikely to change international financial variables that a lot.

“The preliminary response to President Putin’s declaration was
a right away risk-off with oil costs spiking. Our sense is that
a part of the fairness transfer was a miscalculation over the sooner
Russian troop withdrawal. Russia’s financial system is itself sturdy with
report FX reserves, indicators of inflation peaking (Jan. 8.7%), its
highest present account ever and debt-to-GDP ~20%.

“The Ukrainian foreign money has been beneath strain not too long ago,
whereas authorities bond yields have spiked however to not the extent
seen through the annexation of Crimea.”
(Reporting by Reuters markets group, compiled by Karin
Strohecker, enhancing by Sujata Rao)

Leave a Reply