The standoff over a Russian invasion of the Ukraine is intensifying, causing panic in global markets that are already on edge over tightening monetary policy. In the latest developments on the geopolitical crisis, US President Joe Biden has placed 8,500 troops on heightened alert for deployment and conferred with top European allies on a unified front against Russia and its president, Vladimir Putin.
Most at risk from a clash with Russia are European economies, but the current volatility in the markets are showing no one’s immune. Global markets, including the JSE bled yesterday, and this morning in Asia markets tumbled following a highly volatile day on Wall Street. “We think that there will ultimately not be a full blown conflict, but the visibility is low and the potential for a rapid escalation exists,” Bloomberg quoted JPMorgan Chase & Co strategists from a note to clients.
The market “is obviously getting a little bit jittery about what could happen, whether a military altercation might happen, and what it means for” US sanctions on Russia, Lale Akoner, senior market strategist at BNY Mellon Investment Management, said on Bloomberg Television.
South Africa, which has a close strategic relationship with Russia through the BRICS grouping (Brazil, Russia, India, China and South Africa) has taken a wait-and-see approach much to the ire of the Ukraine’s ambassador to South Africa, Liubov Abravitova. She told the Daily Maverick that it is very critical for the international community to engage with Russia to deter the Kremlin from military action and aggression. “The troops are concentrating and it looks – and is – very threatening. We’re trying to get any reaction or support from the countries where we are accredited. And it is very unfortunate that the interest towards it is very low. We would encourage any engagement with the Russian authorities to convey the urgency of the situation from the South African side,” she told the publication.
The Ukraine has meanwhile called for calm after a top-level national security and defence council meeting in Kyiv, Bloomberg reports. Even with an estimated 109,000 Russian troops near its borders, plus about 10,000 support personnel, there is no reason for panic and the foreign reaction has been overblown, Bloomberg quoted the council’s chairperson Oleksiy Danilov as saying. In comparison, the NATO Response Force numbers 40,000 personnel drawn from multiple nations.
Several nations have already started to slap sanctions on Russia, while others have started to evacuate diplomats and their families.
In a rare Russian response apart from denying its intention to invade, Kremlin spokesman Dmitry Peskov told Bloomberg in a conference call yesterday that Russia has observed a buildup of Ukrainian forces along the frontline with Moscow-backed separatists and sees a “very high” risk of an offensive by Kyiv. He blamed the US and NATO for increasing tensions and said the “threat is there and it’s very high, higher than before”. The US move to evacuate diplomats’ families from Kyiv has exacerbated the situation, according to him.
On the forex front, the rand succumbed to a bit of panic selling late yesterday, but it corrected all the way back to R15.22 as markets shrugged off the initial sell-off and closed the day in the green, according to TreasuryONE.
The local unit has since moved back to the R15.30-level as “we head into the interesting part of the week with the Fed tomorrow and the MPC on Thursday”.
“Coupled with the central bank meetings is the unease in the equity space and trouble in Ukraine, which indicates that the rand could be in for a bumpy ride in the very short term,” the forex trading huse cautions.
Commenting on moves in commodities, TreasuryONE says markets initially reacted in the same way as equities – first a selloff followed by a correction by the time markets closed in the US. This morning, gold is trading back above the $1,840-mark at $1,842, platinum at $1,023 and palladium $2,107. Brent Crude, which jumped on rumours that the Fed could hike interest rates quicker than expected, is back down at $86.89 a barrel.
In cryptocurrencies, Bitcoin – a poster child for swings in sentiment – pared some of its gains from Monday, when it advanced for the first time in six days.
With the lethal combo of tightening monetary policy, war talk, omicron and volatile markets, it’s time to fasten the seatbelts.
Here’s a roundup of the world’s top and most interesting headlines:
SA Business
Randemic: Three FNB customers pocket R13 million just for being vaccinated – Fin24
South African town with ’11 hours of load shedding a day’ wins case against Eskom – BusinessTech
Hawks arrest Absa engineer for alleged theft of R103 million – Fin24
Global Business
Beware the BEASTs: SA among most vulnerable countries when US rates increase – Fin24
Goldman Sachs sees the metaverse as $8 trillion opportunity – Bitcoin.com
Reuters reports China’s Tencent fires 70 staff, blacklists 13 firms in anti-graft campaign, while the tech giant is set to limit access to its gaming platform ahead of school break in China – allowing 14 hours of play – Business Insider
Markets
Asian markets tumble as volatility sweeps globe ahead of Fed meeting – AFP
Rich Dad Poor Dad’s Robert Kiyosaki: Bitcoin is crashing, will buy when BTC tests $20K – Bitcoin.com
Tech stocks rally back from the brink as investors buy the dip – Bloomberg
Opinion/In-depth
Webb telescope reaches final destination, a million miles from Earth – AFP
A view of digital transformation in SA’s public sector – Bizcommunity
‘They were like bandits’ – how did the rich get richer? – BBC News
Video
Currency expert Andre Cilliers on the red hot rand – where to from here? – Biznews
Tesla Cybertruck walkaround video shows the absurdly huge windshield wiper in detail – The Verge
Scientists monitor new omicron subvariant – eNCA
Currency expert Andre Cilliers on the red hot rand – where to from here? – Biznews
Tesla Cybertruck walkaround video shows the absurdly huge windshield wiper in detail – The Verge
Image credit: Wikimedia Commons
