Russia’s invasion of Ukraine is ongoing, and it is impossible to know at this point how it will play out in terms of duration or magnitude. While any such aggression causing loss of life and freedom is first and foremost a humanitarian tragedy, it also brings economic fallout.
The reaction in financial markets was predictably swift. Stocks fell due to rising uncertainty, which typically results in business decisions being deferred. As is common, some of the initial declines were recovered as traders weighed the situation, but there continues to be volatility in response to developments in Ukraine, a pattern that will undoubtedly persist.
Oil prices rose sharply. Russia is the second largest supplier, and disruptions are now quite possible. Supplies were already tight, and the conflict adds a new layer of concern. There was some backing off from the initial spike, but an ongoing risk premium is clearly in place.
