WAR, Geopolitics, Commodity Price Going Up, Inflation Can be Worse, and High Uncertainty

By Stanislaus Adrian Pratama

Last Week, Russia and Ukraine were not in a good relationship. Ukraine insisted on joining NATO, meanwhile Russia didnโ€™t like it if Ukraine joined NATO. Situation got worse when Donetsk and Luhansk declared independence and Valdimir Putin supported it. The US and Allies already gave political and economic sanction to Russia as an action as Vladimir started the invasion.

There are 2 perspectives of this invasion, first Russia just used a defensive mechanism as threat of NATO and alliance to go further to their land, and Second, Russia wants Ukraine to join Russia. Whatever it is, war is not the right thing to do. War must end, peace must happen, and diplomacy is the way to solve it.

As we know, this war had a high impact on the market, Stock, Bond, Commodity, and also Currencies Market. So what should we do? Commodities that highly impact are Energy. WTI Oil, tested again at 99$ per barrel, UK oil reached 105$ per barrel, Coal broke high at 260$ per tones, Gas constant at up trend steady at $4,6 per million. It will directly impact global inflation. MOEX Stock tumble at 38%, of course the Russian Central Bank conducted radical action to save MOEX. Investors in the US, also take action as risk averse by selling Stock, and impacted 3% of the market. Yield going down, Bond is one of the assets that investors are looking for as a safe haven. Almost all pairs of currencies show gaps as market response to the war that is getting hot right now. Gold, still steady at $ 1925-1900 per troy ounce. All pairs against JPY and CHF are struggling. It shows markets are choosing to keep safe haven for a while regarding high uncertainty at the market as an impact from the Russian and Ukraine war.

So again, what should we do? Geopolitics usually have inconsistent and temporary impact on the market, being agile, and responsive to situations is one of what we need to do in the Market. Next month, a lot of the Central Bank held meetings to decide monetary policy to prevent high inflation going higher.

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No trade is the wise and best thing right now, avoid risky assets and safe haven to trade such as, JPY, CHF, Gold, and US. The war can be longer or shorter than we expected. Being reactive is better than being predictive, better to lose opportunity than losing equity.

Godspeed, may peace be with you, Russia, and Ukraine, stay safe, and happy trading.

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