Exacerbation of military conflict and possible consequences for markets

Almost a month has already passed since “Partial mobilization” was announced in the Russian Federation, during which it was planned to call up 300 thousand military personnel.

Mobilization will significantly increase the activity of military operations in Ukraine and may lead to a new attack on Kyiv from Belarus.

The escalation of the conflict is predicted for the end of October, beginning of November 2022, by which time Russia will be able to complete the training of newly recruited military personnel.

The first signs of a worsening situation were calls from the Foreign Ministries of China, Egypt and a number of other countries to leave the territory of Ukraine.

It is clear that such a situation cannot but affect the financial markets, so we should prepare for unpleasant events now.

What will the intensification of military operations in Ukraine lead to?

First of all, the Russian stock market will begin to fall again; the downward trend will be accelerated by the next sanctions that will follow the start of a new offensive by Russian troops.

It is highly likely that the US stock market will continue to fall, with the exception of securities of enterprises associated with the military-industrial complex.

The dollar will continue to strengthen, and precious metals will begin to fall in price again due to an inverse correlation with the American currency.

A new wave of refugees from Ukraine towards Europe is quite likely, which will not add optimism to the EU economy and will cause a fall in the main indices on European stock exchanges.

At the same time, we should not forget about the record rise in energy prices for European companies, which will only increase the negative impact on the EU economy.

The deterioration of the situation in the Eurozone is predicted to lead to a further fall of the euro against the US dollar.

Nothing good can be expected in the cryptocurrency market either; only stablecoins pegged to the US dollar will remain stable here, and other assets will resume their downward trend.

In such a situation, investors are advised to refrain from long-term investments and focus all their efforts on intraday trading, while being prepared for a sharp increase in volatility and the associated consequences.

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