Ukraine-Russia tensions hit markets and oil escalates to seven-year high

Volatility soared across markets on Monday, with a gauge of possible swings in the euro-dollar exchange rate at a high since November 2020 and a measure of equity volatility at a two-week high.

The markets spooked late on Friday after the United States warned that a Russian invasion of Ukraine It could arrive at “any moment”. On Sunday, Washington said Moscow could create a surprise pretext for an attack.

The markets Stocks fell sharply on Monday and Wall Street was preparing to open lower, while prices of the Petroleum they headed toward $100 a barrel. Assets such as public debt and the Swiss franc benefited.

The prices of Petroleum rose further to new seven-year highs, amid concerns that an invasion of Ukraine trigger US and European sanctions and disrupt exports from the leading producer of rawin an already tight market.

Aside from the threat of war making it difficult to supply Petroleum and hit economic growth, central bank policy has been an added source of volatility.

Inflation, at record or multi-year highs, is fueling speculation that the US Federal Reserve could opt for an aggressive cycle of rate hikes, and that the European Central Bank could also raise interest rates this year.

UBS Global Wealth Management noted that market swings had increased since the beginning of the year, while concerns over COVID-19 had subsided.

“Volatility remains high on the back of repeated surprises to the upside in US inflation data and growing concerns in Eastern Europe”He said.