Markets don’t fear a Russian invasion of Ukraine
More than 100,000 Russian troops are massed on on Ukraine’s borders – but the markets seem to think the threat is not as great as many people think

“We are in the unusual position of global headlines and politicians warning of the risk of a major war, and yet markets…remain mostly unconcerned,” says Michael Every of Rabobank. The massing of more than 100,000 Russian troops on Ukraine’s borders has not gone unnoticed – but the consequences so far have been very limited.
True, Russian assets have sold off as foreign investors anticipate more sanctions, to the point where some Russian company valuations have started to “look frankly absurd”, say Robert Armstrong and Ethan Wu in the Financial Times. Gazprom, which is benefiting from high oil prices, trades on a price/earnings ratio of just three and a 17% dividend yield for the year ahead, for example. Yet in other respects, investors don’t seem to be positioning for conflict, says Katie Martin in the same paper. If they were, you would expect them to rush into classic safe-havens such as the Swiss franc and Japanese yen, US government bonds and gold. Instead, January has seen US bonds sell off and the franc dip against the dollar. The “yen is flat” and “gold is a snooze fest”.
Western politicians are suggesting that a Russian invasion of Ukraine could be just weeks away, but investors seem inclined to agree with the Ukrainian government, which has been downplaying the threat. “The belief in Kyiv is that Vladimir Putin’s goal is the long-term destabilisation of Ukraine, and that the Russian leader may have other objectives than invasion,” say Dan Sabbagh and Luke Harding in The Guardian. These include forcing the West to accede to its demands, such as a block on Ukraine and Georgia joining Nato.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Chaos in commodities
If these assumptions are wrong, there will be “huge market implications”, says Every – including a flight to safe-haven assets and turmoil in many commodities. Rabobank analysts reckon that even a limited war could send oil up to $125 a barrel from about $90 a barrel now. In the most extreme (and unlikely) scenario, where US sanctions cut Russia off entirely from supplying world energy markets, oil could hit $175 a barrel.
Russia is also a significant metals producer – it accounts for about half of global nickel exports and a quarter of the aluminium market, according to Rabobank. “Any disruption to flows of… metals, including palladium, nickel and aluminium, could propel prices sharply higher,” says Alexander Nicholson on Bloomberg. For a small taste of what might happen, note that in 2018 the US imposed sanctions on aluminium giant Rusal, only to learn that “cutting off supplies from Russia’s commodities producers” can wreak “havoc on manufacturing supply chains”.
Finally, Russia is the world’s biggest wheat exporter, with Ukraine in fifth place. The countries’ food exports mostly pass through the Black Sea, close to the potential conflict. “About half of all wheat consumed in Lebanon in 2020 came from Ukraine,” says Alex Smith in Foreign Policy. Egypt, Malaysia, Indonesia and Bangladesh are also big buyers of Ukrainian wheat. A decade on from the Arab Spring, which was triggered by rising food prices, war in Ukraine could send another wave of political turmoil “across Africa and Asia”.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
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.
-
Four income funds to add to your ISA
Adding one of these four income funds to your stocks and shares ISA ahead of tax year end could pay dividends
By Dan McEvoy Published
-
Are regular savings accounts worth it?
A 7% interest rate is eye-catching, but how much can you save in a regular saver account and how does the interest rate work exactly?
By Ruth Emery Published
-
Three top-notch Taiwanese companies cashing in on the advent of AI
Opinion Eric Chan, investment director and co-manager of the Aberdeen Asian Income Fund, highlights three potential Taiwanese winners in the technology industry
By Eric Chan Published
-
Weight-loss drugs could revolutionise the economy – the investments to buy now
The new generation of weight-loss drugs are a boon for the overweight, but they also promise to change our relationship with food and revolutionise the economy
By Dr Matthew Partridge Published
-
Find tomorrow’s Asian giants while they are still smaller companies
Opinion Nitin Bajaj, portfolio manager of the Fidelity Asian Values trust, picks three Asian companies to invest in.
By Nitin Bajaj Published
-
AI will maintain Moody’s market lead, says Stephen Connolly
Opinion Veteran data provider Moody's has adapted well to the modern world, and is one of Warren Buffett’s longest-held investments
By Stephen Connolly Published
-
Is BlackRock World Mining gearing for a recovery?
Opinion After a frustrating year, BlackRock World Mining is positioned for growth and to capitalise on the sector's recovery
By Rupert Hargreaves Published
-
Should you limit exposure to US tech stocks?
An end to the AI boom would shake both US funds and global trackers. Here’s one way to trim exposure to US tech stocks
By Cris Sholto Heaton Published
-
The mystery of America’s gold and why an audit matters
How much gold does the US actually have? Dominic Frisby explains why it matters
By Dominic Frisby Published
-
Art vs AI: artists’ uprising takes on the bots
AI performs impressively, but it’s all based on human work that was taken without payment. The government thinks this is fine. Copyright holders beg to differ
By Simon Wilson Published