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Markets edged higher today on fears of imminent Russian military action in Ukraine, plunging stocks and pushing oil to a seven-year high.
International oil benchmark Brent crude touched the $96 a barrel mark for the first time since September 2014, as geopolitical risks on Ukraine ripple through global markets.
Oil surged as traders speculated that the Russian invasion of Ukraine would disrupt energy exports. This will create disruption at a time when the market is already tight with increased demand and increased supply.
Such a supply shock would hit economies emerging from the pandemic, driving inflation even higher, while sanctions on Russia could shake the broader financial system.
as Kyle Rodda Of IG telling:
Markets are preparing for the risk of war in Europe, and this is adding to the complexity of the issues currently driving uncertainty and volatility in global markets.
US reports on Friday suggested a Russian invasion of Ukraine could come as soon as this week – earlier than expected, as the Russians are believed to be trying to placate the Chinese before the end of the Beijing Olympics. – With further reports suggesting today that Wednesday could be the planned day.
From a humanitarian point of view, international relations pundits suggest it could be disastrous. For markets, there are concerns about the impact such a conflict would have on fragile energy markets, European economic growth and the broader financial system if sanctions are imposed on Russia.
Friday night’s warning by the US of a “very clear possibility” of a Russian invasion of Ukraine may soon rattle investors, hitting stock markets.
Phone conversations between Joe Biden and Vladimir Putin over the weekend failed to defuse tensions, with a sense of risk souring. Asia-Pacific stock markets fell sharply with Japan Nikki 2.2% and China’s has dropped CSI 300 The index is down more than 1%.
European markets set to open lower with UK FTSE 100 The index is expected to fall around 1% when the market opens at 8 am in London.
German chancellor, Olaf Scholz, will visit Kiev today, as Western governments step up their diplomatic effort to stop the Russian invasion of Ukraine.
On the eve of his departure, Scholz said that any attack by Russia would result in “difficult sanctions that we have carefully prepared and which we can implement immediately”.
“(These are trips) about how we can find a way to ensure peace in Europe,”
Scholz will then visit Moscow on Tuesday to press home the economic cost of the Russian invasion of Ukraine.
Here’s our latest news on the Ukraine crisis:
Investors are already worried about inflation, with prices rising at the fastest rate in 40 years in the US and 30 years in the UK. Interest rates are expected to rise further this year, with the US Federal Reserve expected to raise borrowing costs up to seven times in 2021.
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- Afternoon GMT: India’s inflation rate for January
- 4.15 pm GMT: ECB President Christine Lagarde’s speech to the European Parliament on the 20th anniversary of the Euro banknotes and coins