The Ukraine war has been heartbreaking to watch. War has always been cruel with the great loss of lives and precious resources. More so in this modern era of social media, phones/cameras and drones etc. Numerous videos with different perspectives are widely available online. One of these great minds I follow is Prof Alex Stubb, former Prime Minister and Finance Minister of Finland.
One of the most obvious financial impact of Ukraine war would be the price of oil, where we can see from below the price of WTI oil spiking from $94 (Feb 2022) and even up to $130 (Mar 2022)! In the following months of 2022, the price of oil remained high above $100, until it became obvious that instead of a lightning fast victory expected from Russia, the war is grinding on beyond one year. The current price of WTI is settling around $80, even below the invasion of Ukraine, as worries of global recession arise.
The second most obvious impact would be the strength of USD following the war, as global risks and uncertainties arise, people tend to flee towards strength, which would be the USD. The Dollar Index climbed from $96 (pre-War) up to $113, until settling down to the current $101. Similarly for USD/SGD $1.34 up to $1.43, before settling down to $1.33 now
Other $ impact would include global supply chain constraints in Wheat, Fertilizers and Agricultural products, all helping to push Inflation numbers higher, with Risk and Logistics Costs all baked into the final Prices of many everyday items
To those who are following the Ukraine War, we are currently in Day 419. While personally hoping for a solid Ukraine spring counterattack for this cruel war to end soon, it does not seem too likely, with Russia too pooling in more resources and mobilization, in view that this is an Existential Threat. Dictators cannot lose, as it would mean their personal Death or permanent Jail & historical Disgrace. Remember too that Russia has the largest arsenal of Nuclear Weapons and might be forced to use somehow through Intention or a fat-finger Mistake. Hence the "better" option would be for this war to grind on for years to come, until someone is assasinated or passes away. It's kind of a scary thought, but remember the also long Afganistan war?!
For Investors like us, it's another major hoop to navigate through in this global sea of Risks. The Market is not immune to negative news, and usually climbs through walls of Worries. Historically and Amazingly, mankind prevails somehow, through the Grace & Mercies of God. With an eye to Challenges, let's continue to press Up and On! 😎
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