Markets fear inflation more than war

The world's stockmarkets have dismissed Russia's invasion of Ukraine - preferring to concentrate on the perils of inflation.

Man in a steelworks
European supply chains rely on Ukrainian factories
(Image credit: © Alexander Kravchenko\TASS via Getty Images)

“Investors who lived through the 1980s may be experiencing a sense of déjà vu – persistently high inflation and strained relations with Russia”, say Lauren Foster and Andrew Welsch in Barron’s. Yet the America’s S&P 500 is only marginally down since the Russian invasion last week. The FTSE 100 is off about 2%. Other European markets have been hit slightly harder, with Germany’s Dax down more than 5% since 23 February.

These fairly small moves may be because “history tells us that major geopolitical events will have almost no impact on markets after six to 12 months”, says Michael Rosen of Angeles Investments. “Looking at the past 70 years, markets have usually taken a few weeks from the start of a war to find a bottom,” says Stefan Kreuzkamp of DWS. “Once markets conclude that the (economic) situation is not going to deteriorate any further,” then asset prices start to rise again. That said, “a military conflict on this scale, in the backyard of the EU and involving a superpower, has not happened during the past 50 years” – so we don’t have much historical precedent to go on.

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Markets editor

Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019. 

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere. 

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful. 

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.