Markets in turmoil as Russia launches invasion

Markets in turmoil as Russia launches invasion
Russian markets have halted trading, while the prices of commodities like gold and oil are soaring. / Image: bne IntelliNews.
By Theo Normanton in Moscow February 24, 2022

Markets have reacted sharply after Vladimir Putin launched a full-scale military invasion of Ukraine early on the morning of February 24.

Brent crude prices are up by 6.5% at $103 a barrel as investors have flocked to buy commodities as a hedge against volatility. This is the first time that the benchmark has exceeded $100 since Russia’s annexation of Crimea in 2014.

Gold is also up by 1.7% on the Hong Kong index, trading at $1,941 per ounce. Gold is also considered a hedge against volatility.

Despite the oil price rise, the Russian ruble has sunk, with one US dollar now worth 88 rubles, compared with just 75 on 16 February. A common rule of thumb among Russian economists and financiers says that the ruble is in dire straits once it is approaching 80 to the dollar.

Russia’s RTS index was down 48% at 586 points by midday on February 24 compared to its previous close, comfortably its lowest point in over five years. The Moscow and St Petersburg stock exchanges have both closed, saying that they will resume trading at an unspecified later date.

The authorities also banned short selling. However, Russian stocks are still trading over the counter on various other virtual exchanges. Russian retail investors have been buying stocks in the last months as international investors flee on the rising risks, as most Russians were not expecting Putin to follow through on his threats to Ukraine. 

World markets are also down after the news of the invasion, which Russia insists is merely a “special operation” in the Donbas region. Hong Kong’s Hang Seng Index is down 3.6% at 22,804 points, while Australia’s S&P/ASX 200 index is down 3% at 6,990 points.

The Turkish lira has lost 2.7% today, while there are now almost 30 Ukrainian hryvnia to the US dollar.

Explosions and air raid sirens have been heard in Kyiv on Thursday morning, 24 Fenruary, after Putin broadcast an announcement vowing to “de-militarise and de-Nazify Ukraine”. Russian vessels landed troops on Ukraine’s southern shore, and artillery opened fire on Ukrainian towns from the border with Belarus, where Russia has tens of thousands of troops stationed following joint military exercises with the Belarusian armed forces. Russia insists that it is only targeting military infrastructure.