Putin's Ukraine invasion upends global markets
- Matt Phillips, author of Axios Markets
Stock, commodity and energy markets whipsawed on news of Russia's invasion of Ukraine.
Why it matters: The violent reaction of financial markets suggests investors think Russia's aggression could further unsettle a world economy struggling to recover from the pandemic.
By the numbers: The S&P 500 was down more than 2% at times in morning trading, before curtailing losses.
- The benchmark index is down more than 7% this month, putting February on track to be the worst month for the market since the start of the pandemic in March 2020.
Our thought bubble: The most significant market impact of the invasion is in commodities markets, where Russia is a massive producer of a wide range of metals, grains and energy products.
- Prices for European natural gas — most of which is supplied by Russia — soared by more than 50%.
- European crude oil prices surged by nearly 6% and briefly crossed $100 a barrel.
- Aluminum jumped more than 5% to a record high.
- Wheat prices jumped to their highest level in a decade.
The bottom line: Commodities prices, in the short term, will worsen the worldwide struggle with inflation. Over the longer term, the erratic behavior of Russia could force a major shift of global trade networks, prompting Europe, especially, to rely less heavily on Russian raw materials.