Geopolitical Risk Returns for Global Markets
Summary
Europe and its allies will wage “total economic and financial war,” Bruno Le Maire, France’s economy minister, said today. Experts said the sanctions were based on lessons that the U.S. and its allies learned from 2014, when Russia occupied Crimea and the West’s financial punishments proved an ineffective deterrent. • None Elina Ribakova, the deputy chief economist at the Institute of International Finance, called the sanctions “serious” and predicted Russia’s economy could contract by double digits. Still, the sanctions will have a noticeable impact on commodities where Russia is a key producer, including wheat, corn and metals like palladium and nickel. Mark Haefele, the chief investment officer of UBS’s wealth management division, noted in a report to clients yesterday that market sell-offs “linked to geopolitical turmoil tend to be short-lived.” But as any experienced investor knows, past performance is no guarantee of future results.