EU and US area futures in sharp decline during the European session. NASDAQ -2.20%, S&P 500 -1.70%, DAX -3.70%, FTSE MIB 3.50%, at writing.
This morning, the Ukrainians say a large-scale invasion began, while the Russians claim to be a special operation designed to demilitarize the neighboring country. The Moscow stock exchange loses 35%, the ruble 7%. The Russian currency reached an all-time low.
The Russian central bank said it ordered brokers to suspend short sales on the Russian stock exchange and over-the-counter markets until further notice following the collapse of Russian assets following the Moscow invasion of Ukraine. The central bank said it wanted to protect investors' rights, reduce risks and limit excessive volatility. Earlier, the bank said it would intervene in the currency market after the ruble plunged to an all-time low.
Agencies are reporting massive explosions in Ukrainian cities, not just at the border, but as far as Odesa, Kharvik, Mariupol, and Kyiv, where sirens sound and a Russian operation is underway take control of the airport. The attack has already claimed hundreds of victims, according to CNN.
The US will release the GDP numbers.
Conclusion
As mentioned in previous articles, I did not expect such an escalation. In any case, I had already considered this hypothesis. When investing in the financial markets, a trader must always consider the most adverse scenarios.
It is not yet clear whether this is an invasion or simply a special operation intended to demilitarize the neighboring country. The markets are currently considering the worst-case scenario, a large-scale invasion, and an armed conflict. In my opinion, this scenario is already discounted in the prices we are seeing now.
The markets have always risen in the long run in the event of an armed conflict. This is, therefore, a buying opportunity. In the next few hours and days, I will increase my portfolio on the long side.
Furthermore, the Russian-Ukrainian chaos could slow down the restrictive policies of the major central banks, giving considerable strength to the financial markets. That, combined with the world emerging from the global pandemic, could give rise to a new market rally.
I still have gold in my portfolio that is currently at a loss, but I'm not worried at all. The markets will settle down shortly. In a few weeks, I expect a recovery of the pre-crisis values.
Alibaba (NYSE:BABA) data is expected today, and I expect a very cautious outlook and a lowering of revenue and earnings estimates that could plunge prices.