Russia has invaded Ukraine

For the month as a whole, the US S&P 500 Index fell by 3.0 per cent measured in USD, while the European Stoxx 600 Index dropped by 3.2 per cent measured in EUR and the Nordic VINX Index declined by 5.9 per cent measured in NOK. Here in Norway, the Oslo Stock Exchange Benchmark Index (OSEBX) rose by 2.3 per cent.

War in Europe

On 24 February, Russia invaded its neighbouring country Ukraine following a lengthy period of threats and negotiations. The Russians have met strong resistance and hard battles on their way into the country. The acts of war have affected the civil population and sent around 14 million inhabitants fleeing westwards. We are thus seeing a humanitarian and human crisis unfold in Europe, on a scale unseen in recent times. Western countries have taken a strong stance against the war and are sending weapons and other aid to Ukraine.

Exclusion of Russia

One of the measures adopted by the West is economic sanctions, and one of the strongest economic measures is to exclude Russia from the SWIFT system. The pressure on Russia has also come from a number of European and American companies that have chosen to leave the country. This has had a serious effect on Russia’s financial system and is expected to send the country into a deep recession. For example, the rouble has fallen by 40 per cent against the US dollar, and the base rate has been doubled from 10 to 20 per cent to prevent the collapse of this currency. Although badly affected, Russia is nonetheless self-sufficient with necessary goods such as energy and food.

Commodity prices through the roof

Russia’s GDP is only around 2 per cent of the global GDP. However, the country has a lot of energy resources and raw materials. For example, 40 per cent of the EU’s gas comes[AS1]  from Russia. This has increased the uncertainty in the financial markets and sent the prices of energy and various commodities through the roof. One of the market’s major fears is that the supply of Russian gas will stop. For the European economy, this would mean lower growth and higher inflation.

The road ahead …

War contributes to increased uncertainty in the markets, and this has led to stock exchange falls. At the same time, it is at such times that the stock market can provide good buying opportunities. The long-term earnings outlook still seems good, and the alternative return in the fixed income market appears to be low.

It's a victory when the weapons fall silent and people speak up.

Volodymyr Zelensky