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Turmoil in Russia Stirs Market Volatility

Unrest in Russia escalates, causing ripple effects in global financial markets.

Soldiers of the Wagner Paramilitary group stationed in the city of Rostov-on-Don
Soldiers of the Wagner Paramilitary group stationed in the city of Rostov-on-Don

Impact on Global Markets: Reactions from Analysts and Investors

Rebel Russian mercenary forces have made a rapid, unrelenting advance towards Moscow, seizing a southern city in their wake. Despite the Russian military's efforts to halt this progression through aerial attacks, their advance continues.

Experts from the investment and finance sectors have shared their views on these unfolding events.

Repercussions on Investment Strategy: Steve Sosnick's Take

Steve Sosnick, Chief Strategist at Interactive Brokers, describes the event as a real game-changer, which will lead to an initial shock and a flight to safety. Sosnick predicts that this event will likely stir the VIX (Volatility Index) from its slumber, subsequently boosting government bond prices and the USD, while riskier assets will probably take a hit.

While Russia's connections with the global economy are tenuous, the country's plentiful sale of raw materials to sympathetic nations like China does have significant implications for global supply chains. Sosnick suggests that we can reasonably expect a surge in the prices of oil and other key commodities, potentially triggering stagflation fears and putting a damper on equity values.

Predicted Market Moves: Michael Purves' Perspective

Michael Purves, CEO at Tallbacken Capital Advisors, recognizes the potential for certain high-flying sections of the stock market to use this geopolitical shock as an opportunity to sell. The situation could have a more substantial impact on the U.S. stock market than usual, considering the recent surge in stock prices.

Purves suggests that we can expect short-term shock to the prices of commodities produced in Russia, following these political disturbances. He anticipates a traditional risk-off dynamic to play out, with global equity futures dropping, and crude oil and treasury prices climbing.

Potential Civil War Scenario: David Kotok's Analysis

David Kotok, Chief Investment Officer at Cumberland Advisors in Sarasota, Florida, indicates that Russia could be on the brink of a civil war, with major implications given Putin's weakened state and the looming threat to his adversary.

Flags of NATO and Turkey
Flags of NATO and Turkey

Kotok points out the potential geopolitical impact on Russian alliances like Belarus and nearby countries in the Soviet sphere, as well as the potential responses of Hungary and NATO ally Turkey. He emphasizes that the strategic damage is already done, leading every capital in Russia's alliance of countries, their adversaries, and neutral parties to reassess their relationship with Putin.

Market Volatility and Resilience: George Boubouras' Forecast

George Boubouras, Head of Research at K2 Asset Management in Melbourne, warns that the ongoing events in Russia are worrying for the complex geopolitical global landscape and will likely cause uncertainty in the markets. However, he notes that developed markets remain resilient despite these challenges, and fundamentals will ultimately regain prominence.

Scenario-based Market Impact: Jamie Halse's Speculation

Jamie Halse, who manages an A$500 billion Japan-focused fund at Platinum Asset Management in Sydney, provides a hypothetical situation. If Putin were to be removed, leading to troop withdrawal from Ukraine and a peace deal, this could be bullish for Russian-exposed businesses, Eastern European stocks, and possibly even Chinese stocks. Conversely, energy, resources, and defense stocks may experience bearish effects.

However, he acknowledges the uncertainty of the current situation and the serious implications of a potential civil war in a major nuclear-armed nation, which he admits should make anyone uncomfortable.