France President Macron is on the wires saying:
- we are preparing reaction in case of Russian aggression of Ukraine
- if there is an attack, we will reply. The price will be high
- Russia is becoming a force for destabilization.
The geopolitical risks from Russian aggression as certainly been a negative for stocks (it doesn’t help). However, often times the fear is greater than the reality (especially invasion risk). That doesn’t mean that this story won’t continue and fears /destabilization continue, nor other non military actions that could cause instability. It is hard to quantify and certainly the smallest of threatening movements, can cause a domino effect in the market (stocks lower, gold higher, safe haven yields lower, perhaps some rise in commodities like oil, wheat, etc)..
In the forex, the EURCHF yesterday hit the lowest level since end of May 2015. The CHF tends to be a safe haven currency. The Eurozone is most at risk economically if there is tension. Today the price is off that level (maybe some SNB intervention), but the price remains near lows.
Meanwhile the FT is out with a piece saying US and the EU are closing in on agreeing Russian financial sanction over Ukraine. The article says:
- There has been really encouraging convergence between allies particularly on financial sanctions being contemplated.
- The focus has been on the size of the financial institutions and state own enterprises to be targeted.
- Focus is also on severity and immediacy of the measures.
Meanwhile WH press sec. says there is no desire by Biden to send US troops to Ukraine other than with NATO.