Geopolitical Escalation Causes Market Turbulence
The continuous escalation of the Russia-Ukraine conflict has once again plunged global financial markets into deep turbulence. The further spreading of the conflict has heightened risk-averse sentiment, causing significant short-term fluctuations in the price of gold, a safe-haven asset. Recent data shows that spot gold prices have recently risen above $1,850 per ounce, but later retreated to $1,833.63 per ounce due to the strengthening of the dollar.
Meanwhile, the energy market has also been directly impacted by the conflict. As one of the world's major energy exporters, Russia's involvement raises the risk of supply chain disruptions, pushing oil prices to break past $95 per barrel. Although some countries have taken measures such as releasing strategic reserves, uncertainty in the energy market persists.
Divergent Performances in Global Stock Markets
The escalation of the conflict has noticeably affected global stock markets, particularly impacting the European markets. Major European indices generally declined, with banking and energy-related stocks taking a hit. In the U.S. market, the S&P 500 and Nasdaq indices have also faced pressure. However, defense and military stocks have stood out due to increased geopolitical risks, offering rare positive performance.
Emerging markets are facing greater challenges due to capital outflow pressures. The influx of capital into safe-haven assets like the dollar and gold has caused some emerging market currencies to depreciate. Capital outflows, coupled with rising energy and food prices, have further magnified the economic risks in these countries.
Unrest in the Foreign Exchange Market
The surge in risk-averse sentiment has driven up the dollar index, making it a primary safe haven for investors. Simultaneously, non-U.S. currencies like the euro and yen have generally come under pressure. The euro, in particular, is experiencing notable depreciation pressure due to Europe's heavy reliance on Russian gas. Although the yen, being a safe haven currency, has some support, its gains are limited, indicating that market risk aversion is primarily focused on dollar assets.
Uncertainties in Future Markets
As the conflict further escalates, global market volatility is expected to persist. The future trend of gold prices will depend on the interplay between geopolitical developments and Federal Reserve policies. Oil prices remain susceptible to supply chain disruptions and sanctions, and investors must be wary of the potential economic impact of continued oil price increases on the global economy.
Overall, the Russia-Ukraine conflict has not only caused short-term fluctuations in financial markets but has also increased long-term uncertainty in the global economy. Investors need to closely monitor the situation and adjust their portfolios flexibly according to market dynamics to cope with potential risks and opportunities.
