Ukraine Jitters Send Markets Tumbling
Stock markets are getting plummeted on Monday as investors prepare for a potential Russian invasion of Ukraine this week.
Reports since Friday suggest an invasion has gone from being a risk to highly likely and the late sell-off in the US followed by today’s plunge reflects that. The timing couldn’t be much worse, especially during a period of high anxiety in the markets and a cost-of-living crisis in many countries.
Europe now finds itself in a very uncomfortable position. We’re in the midst of an energy crisis, and the bloc is incredibly over-reliant on Russia for supplies of gas. To make matters worse, Russia is also a major oil producer, so the price of crude is inching ever closer to $100 a barrel.
The inflationary consequences of all of this at a time when central banks are already eyeing multiple rate hikes and paring back bond-buying are making investors even more nervous. It’s the perfect storm at a time when countries are already navigating through the global pandemic and managing major supply chain issues, all of which are already generating massive inflation.
This has forced traders to aggressively price in multiple rate hikes from central banks this year, despite many continuing to push back against market expectations. They have gradually come around to the market’s way of thinking in recent months, but they remain behind the curve.
A bullish signal for bitcoin?
Bitcoin is a little flat at the start of the week but continues to show resilience in otherwise volatile and risk-averse markets. It continues to see resistance around $45,500, but declines have not been particularly severe, and it’s not even tested $40,000 since breaking back above there 10 days ago. We’re not seeing it be as negatively affected by the news as other risky assets, which could be viewed as a bullish signal. Things may be looking up for cryptos.