Escalation of military conflict and possible consequences for markets

Almost a month has passed since the "Partial Mobilization" was announced in the Russian Federation, which planned to call up 300,000 military personnel.

The mobilization will significantly increase military activity in Ukraine and may lead to a new offensive on Kyiv from Belarus.

An 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 conscripted military personnel.

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

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

What will be the consequences of the intensification of military action in Ukraine?

First of all, the Russian stock market will begin to fall again, and the downward trend will be accelerated by further sanctions following the start of a new Russian offensive.

The US stock market is also likely to continue to fall, with the exception of securities of companies linked to the military-industrial complex.

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

A new wave of refugees from Ukraine heading towards Europe is quite likely, which will not add optimism to the EU economy and will cause a decline 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 decline in 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, while other assets will resume their downward trend.

In this 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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