On Wednesday (2/25), Russia launched a full-scale war on Ukraine. Russian forces have launched the attack on Ukraine at the command of their President, Vladimir Putin, who proclaimed a "special military operation", despite warnings from international leaders that it might initiate Europe's most large-scale war since 1945. Within minutes of Putin's brief broadcast statement, at approximately 5 AM Ukrainian time, explosions were reported near many major Ukrainian cities, including the capital, Kyiv. Ukrainian President Volodymyr Zelenskyy said that Russia is attacking his country's "military infrastructure" and border guards. The operation aimed at 'demilitarisation and denazification' was claimed to be an act of self-defence, alleging Ukraine's democratically elected government responsible for eight years of genocide. Several nations sternly condemned the decision. US President Joe Biden denounced the attack's catastrophic loss of life and human suffering in a statement on Wednesday (2/25), the evening following the explosions. Volodymyr Zelenskyy declared martial law across the country, severing all diplomatic ties with Russia and promising to provide guns to anyone in need. Subsequently, several hours after Russian declared the war, all trading on the Moscow Stock Exchange was suspended.
Global stock markets plummeted following Russia's launch of its long-awaited invasion of Ukraine. European stocks toppled, threatening to enter a technical correction, as many investors have withdrawn their assets following Russia's attack. The DAX index in Germany sank 526 points or 3.9% to 14,092. Correspondingly, the CAC index in France dropped 229 points or 3.7% to 6,551 respectively on Thursday (2/24). Ukraine's situation has become the newest source of concern for European stock investors. Apart from that, traders have expressed concern over increasingly hawkish central banks and the impact of rising prices on growth. "Stock markets have already been battered and are now factoring in the possibility of future military escalation in Ukraine. As a result, the selloff will continue," Norbert Frey, portfolio manager at Fuerst Fugger Privatbank, stated to Bloomberg. Reverting to the situation in Indonesia, on Thursday (2/24), IHSG entered the red zone at the closing of trading as a result of this conflict. According to Indonesia Stock Exchange (IDX) data, the IHSG opened at 6,912.47 points yet fell to 6,817.82 points, a decline of 102 points or 1.48%. Meanwhile, three-quarters of stocks dropped in price, representing 492 units, while another 109 soared and the remaining 82 remained unchanged. The IHSG's drop was mirrored on numerous Asian stock exchanges. Hang Seng Hong Kong plunging 123 points or 3.21% to 22,778.05
The Russian invasion of Ukraine has triggered fresh worries as the commodity and energy market reels. While the conflict has negatively affected the performance of several stock markets, other sectors such as commodities have now undergone price hikes. Crude oil prices surged by nearly over 4% after Putin confirmed the attack, surpassing US$100 per barrel for the first time since 2014. This event stokes fears of disruption to energy exports when supplies are already constrained. On Thursday (2/24), Aluminium prices also rallied to a record high of US$3,382.5 per ton, surpassing the previous high of US$3,380.1 set during the world financial crisis in July 2008. Other commodity prices such as wheat, soybeans and corn were also surging. "Of course, given Russia's role as a commodity superstore, the economic impact of this situation could extend well beyond oil and exacerbate the current global inflationary dynamics," claimed Helima Croft, Head of Global Commodity Strategy at RBC Capital Markets, on Thursday (2/24) to Yahoo. Alongside geopolitical impacts, this Russia - Ukraine conflict has pointed to the potential for a stagflation environment and will complicate efforts to tighten the monetary policy. Given the extent to which this conflict has disrupted numerous sectors of the global economy, if this Russia-Ukraine conflict persists, there will be a more considerable measure at stake, and the destabilisation will come even further.
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