Situations in Financial Markets with the Ukraine War

It has been seen that since the war between Ukraine and Russia in the world, the physical infrastructure has been exposed to many costs and caused many turbulences in the financial markets. Due to geopolitical risks, the market faces a tendency to react. In this case, Dario Caldara and Matteo Iacoviello, economists of the US Federal Reserve, continue to work to compare events at different points by creating the geopolitical risk index.

• -The high geopolitical risk that emerged with the war seems to have increased the uncertainty for investors.
• -Along with this situation, decreases occurred in stock prices and many financial markets.

Changes of the Markets in Terms of Stocks

Considering the situation that many markets are faced with more or fewer commodities compared to other markets, it seems that the reaction of the stock markets to the war is complex. It also revealed the different levels of exposure faced by the Russian stock market.

Developments Continue in Commodity Fluctuation

Oil, one of the energy markets, emerges as a response to geopolitical risk. Since Russia has great importance in terms of oil exports, some changes have started to occur in energy prices. As energy prices were affected by the war, it can be seen that Brent oil was sold for 116 USD per barrel. In addition, according to the latest situation, this price continues to increase by reaching 130 USD and above. With the development of this situation, companies will be exposed to a great impact on their cash flows. It is also expected that inflation pressure will occur as everything is affected by these cash flows.

• -With the continuation of these situations, people think that some sectors will benefit from the war. But short-term gains are not a sign that these things are getting better. Especially firms with short-term gains may emerge with their economic commitment. In addition, it may lose its place in the market due to the burden of sanctions and uncertainties. There is an increase in uncertainty every day. For this reason, decreases may occur in all markets. The people’s budget and people’s pensions, which are independent of these results, will also be affected by this situation. The progress of this largely unpredictable situation is not a good situation for the market and finance.

In particular, there is a high level of activity in the market due to the effects of the war. This movement is progressing by affecting finance badly.