An Eye On The Ukraine Conflict: Implications For Investors

CI Radnor Private Wealth - Mar 01, 2022
In the face of geopolitical unrest, market volatility can be unnerving as we anticipate ripple effects of the conflict. Russia’s invasion of Ukraine follows its recognition of two eastern territories in the Ukraine…

In the face of geopolitical unrest, market volatility can be unnerving as we anticipate ripple effects of the conflict.  Russia’s invasion of Ukraine follows its recognition of two eastern territories in the Ukraine as independent states.  The focus now is on how far and how quickly into Ukraine Russian troops will go, and what the response will be from the United States and Europe.  As the markets wrestle with the impact of war in Ukraine, they also must continue to deal with Covid-19 issues and a Federal Reserve poised to raise interest rates to combat inflation.

Given all of this, financial markets are now very unstable.  How should investors react?  In the short-term we are likely to see additional pressure on markets with wider swings in valuations.  No one can predict how aggressive the Russian invasion will be, and there is always the risk that geopolitical situations get out of hand.  While the direct impact on global growth from weakness in Russia or Ukraine may be limited, the indirect economic and financial market impact will likely be more material.  European markets will likely experience greater impact, given interdependent gas supplies, trade, and tighter financial conditions.

Overall, the Russia-Ukraine conflict will impact financial markets and economic growth.  However, historically markets have proved resilient as geopolitical risks pass.  The big uncertainty is around the escalation of the conflict and whether it spills into bordering NATO countries.  We will continue to monitor portfolios given the unfolding events, but are not enacting any changes currently, as we remain confident that client portfolios remain properly balanced/diversified to weather the uncertain environment.

Having an advisor you can trust is always important, but especially during times of market volatility when there may be an increased need for reassurance, timely insights, and strategic action (or inaction, as the case may be).  We always welcome the opportunity to connect with you, or friends or family who may benefit from financial guidance in these uncertain times – please don’t hesitate to call with any questions or concerns.