Market & Topical Perspectives

Initial Thoughts on Russia’s Invasion of Ukraine

Initial Thoughts on Russia’s Invasion of Ukraine

In the early-morning darkness of February 24, Russia launched a barrage of airstrikes toward strategic targets across Ukraine—including the capital Kyiv.

Key Takeaways

  • The US and its allies are enacting significant economic sanctions in response to Russia’s invasion of Ukraine. The impact of these actions—and Russia’s potential response to them—is uncertain and represents a significant risk to the global economy and financial markets.

  • Markets appear to have been pricing in a strong possibility of armed conflict in Ukraine for the past several weeks, with investors generally eschewing risky assets for relative safe havens like gold and the US dollar.*

  • Technology stocks have dropped sharply year to date, while energy stocks—buoyed by a sharp increase in the price of oil—have jumped. Within equity markets, investors have generally favored value over growth.*

  • Trading activity on the day of the invasion highlighted the uncertain environment, as US stocks opened sharply lower before whipsawing well into positive territory by the afternoon. The CBOE Volatility Index hit its highest level in more than 15 months.*

  • Portfolios managed by the Global Value team have negligible direct exposure to companies based in Russia or Ukraine, and an exposure of less than 1.3% on a revenue basis.

    * Source: Bloomberg; data as of February 24, 2022.

    Views expressed are as of February 24, 2022.