Russia/Ukraine conflict escalation points to a Russia-invasion as reported by US media and confirmed by US Security Advisor.
Market sentiment was bleak as safe-haven flows such as gold, USD and the yen dominated at the end of this week.
Western Texas Intermediate closed the week at $93.10/barrel as geopolitical tensions rose.
US equity markets fell sharply on Friday due to recent geopolitical talk about the Ukraine-Russia conflict. According to US news sources, a Russian invasion was imminent. This prompted a flight towards safe-haven assets.
The S&P 500 falls 2.05% to 4,410.85 at the close of the New York session. The Dow Jones Industrial drops 1.45% to 34,729.63 and the tech-rich Nasdaq composite slides 3.17% to 14.230.95.
Sector-wise, utilities and energy advance 2.79% each (against rising oil price) while technology, consumer discretionary and communications slide 3.01%, 2.52% and 2.54% respectively.
US media wires reported that Russia has invaded Ukraine
According to a PBS NewsHour reporter at 18:30 GMT, the US believes that Russian President Vladimir Putin has made a decision to invade Ukraine. They have already communicated these plans to Russia’s military. Two officials from the Biden administration said that they expected the invasion to start as soon as next week.
The reporter stated that US defense officials anticipated a ” horrible, bloody campaign” that would include two days of bombardment, electronic warfare, and invasion with the potential goal of regime change. According to reports, the North Atlantic Council was briefed today on the new information.
The US National Security Advisor confirms that rumors are true
Jake Sullivan, National Security Advisor, confirmed the rumors later in the day. He stated that the US is in a window where a Russian invasion could occur at any moment and could even happen during the Beijing Winter Olympics.
Jake Sullivan urged Americans to leave Ukraine “as soon possible.” However, Sullivan stated that while Putin may not have made a final decision, Russia has all the forces necessary to carry out a major military operation. However, Sullivan clarified that Russia can also conduct a false flag operation.
Wall Street was closing when Via reported that President Joe Biden of the United States and Vladimir Putin of Russia would speak over the telephone on Saturday.
The geopolitical jitters aside the greenback was bid with the US Dollar Index moving close to 0.50%. This was a return to 96.05 linked to safe-haven flows. The 10-year yield fell eleven basis points to 1.916% below 2% in the US Treasury bond market. This is a tailwind that favors precious metals.
Gold rises by 2% to $1864.44 per troy ounce. Meanwhile, WTI, the benchmark for US crude oil, reached $93.10 per barrel in the wake of renewed Ukraine invasion fears going into the weekend.
The FX Market saw the EUR/USD get hammered by crisis trading at 1.1345. While the GBP/USD traded barely unchanged at 1.3550, thanks to the higher UK’s GDP numbers. The USD/JPY traded at 115.31 due to safe-haven flows. While the USD/CHF ended at 0.9243, it failed to hold onto the 116.00 figure.
