Weekly digest: Ukraine Crisis, Markets Shaken, Gold’s Up

Newsdesk

4 minutes read

Feb 24, 2022

a silhouette of a solder in Ukraine flag colors and a tank crossing the field after Russian President Vladimir Putin announced a full-scale military operation in Ukraine

24/02/22: Russia has launched a full-scale invasion of Ukraine, the S&P is in a correction for the first time since the 2020 Wall Street plunge, gold hits a 20-month high. And more.

The gold price has hit a 20-month high Wednesday evening eastern time, rising to $1,942 an ounce, its highest level since June 2020.

The price move comes as Russia launched a full-scale invasion of Ukraine in the early hours of Thursday, targeting military infrastructure in early strikes with explosions reported at airfields and military headquarters.

a gold bull standing on top of a pile of fine gold bars symbolizing rising gold prices after Russia’s invasion of Ukraine

Spot palladium added 3% to $2,557.34 an ounce, having earlier reached its highest since August 2021 driven by fears of short supply from top producer Russia. Silver went up 2.1% to $25.04 per ounce, and platinum rose 1.5% to $1,108.04. (Reuters)

Russia is the world's third-largest gold producer, while its company Nornickel is also a major producer of platinum and palladium, which are both used in catalytic converters to clean car exhaust fumes.

"If we see a set of sanctions that reduce financing and free flow of the material to the rest of the world, we could see a significant tightening of conditions for palladium probably in the not too distant future," said Bart Melek, head of commodity strategies at TD Securities, adding that it was "still too early" to tell if supply issues would materialize.

market correction for S&P 500 index represented by a cartoon man breaking the stocks graph

The S&P 500 is officially in a correction: the S&P 500's 1% drop on Tuesday confirmed that the world's most-tracked stock index was in correction territory for the first time since the 2020 Wall Street plunge sparked by the COVID-19 pandemic. (Reuters)

U.S. investors sold stocks as fears of war between Russia and Ukraine grew stronger, adding to worries over the Fed’s tighter monetary policy and the expectation for multiple interest-rate increases this year.

Read our SPOTLIGHT about to learn more about the current stock market turmoil.

Bitcoin drops 8% and other cryptocurrencies tumble after Russia attacks Ukraine. (CNBC)

More than $150 billion has been wiped off the entire crypto market in the last 24 hours, according to Coinmarketcap data.

That’s led some analysts to question whether bitcoin’s status as a form of “digital gold” is true.

“Bitcoin is still early in its maturity curve to be firmly placed in the category of ‘digital gold,’” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, said.

Moreover, the correlation between crypto and stocks has been high over the past few months on both inflation-related news and the Russia-Ukraine geopolitical situation, according to Chris Dick, a quantitative trader at crypto market maker B2C2.

“This correlation shows that bitcoin is firmly behaving like a risk asset at the moment — not the safe haven it was touted to be a few years ago,” he said.

Read our SPOTLIGHT to learn why cryptocurrencies are so volatile.

Oil breaches $100 for first time since 2014 on Ukraine attacks, which sparked concerns that a war in Europe could disrupt global energy supplies. (CNBC)

Brent crude hit a high of $101.34 a barrel in early Asia trade, the highest since September 2014, and was at $101.20 a barrel at 04:23 GMT.

Covid Omicron variant is sweeping through cargo ships, adding to concerns that a surge in cases, coupled could delay supply chain stabilization for the shipping industry. (Bloomberg)

“Everyone has had cases onboard. You’ll probably see the number of vessels worldwide affected by omicron increasing for sure because it’s so contagious. That’s despite measures and precautions being taken,” said Mark O’Neil, the CEO of Columbia Shipmanagement Ltd., which operates a crew pool of about 15,000 and has seen a few of its ships struck down.

Read our SPOTLIGHT about the supply chain disruptions and their possible effect on the global economy and the gold price.

Opinion

Ukraine conflict: What are the risks for investors to watch out for? In short, it’s nasty, especially for Russia, but manageable. (FT)

Stocks:

“Investors should keep things in perspective and not overreact to headlines. Although equities can fall more in the near term, we note that market drawdowns due to past military conflicts did not last very long and were mostly buying opportunities,” Emmanuel Cau, head of European equity strategy at Barclays, said.

Oil and gas:

“This is going to be a big conflict. There are massive risks to European energy. Beware of unexpected consequences,” says Tim Ash, an emerging markets strategist at BlueBay Asset Management.

According to Capital Economics, an independent economic research consultancy, in the worst-case scenario, oil prices could hit $120 - $140 per barrel, well above current levels of a little under $100.

This could push Europe’s natural gas prices higher, potentially adding 2 percentage points to inflation in advanced economies.

What else is happening

Russian president Vladimir Putin after photographed after announcing a full-scale military operation against Ukraine

Russia’s invasion of Ukraine: what do we know so far?

  • Vladimir Putin launched a broad Russian military offensive targeting Ukraine early Thursday morning after broadcasting a speech announcing a “special military operation” to “demilitarize” Ukraine.
  • According to Ukraine officials, the initial wave of strikes appeared to involve artillery, cruise missiles and airstrikes which hit military infrastructure and border positions.
  • Three hours into the attack the Russian Defense ministry claimed to have “neutralized” Ukraine’s air defenses and airbases.
  • Ukraine declared martial law in response to Russia’s attack.
  • Western allies said they’re working on a new package of sanctions against Moscow.

Read our SPOTLIGHT to see how geopolitical tensions could affect the global market and the price of gold.

And finally…

😲Scientists have made the first ever recording of a dying human brain that shed some light on our final moments. (Bloomberg)

"Through generating oscillations involved in memory retrieval, the brain may be playing a last recall of important life events just before we die, similar to the ones reported in near-death experiences,” Dr Ajmal Zemmar, a neurosurgeon at the University of Louisville, said.

The recording was made 30 seconds before and after the heart stopped beating.

 

See you next week!

 

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