Equity prices tend to rise on news of Ukrainian gains or improvement on the ground, explained Joseph Brusuelas, chief economist at RSM US.
If you map those three days over the direction of the market, said Quincy Krosby, chief global strategist for LPL Financial, it’s clear that this is a contributing factor to equity gains. “This is good news, even at the margin,” she added.
Russia’s invasion of Ukraine has slowed global growth and raised inflation through large energy supply disruptions — Russia accounts for well over 10% of global oil and natural gas production. Grain supply has also been disrupted, leading to a spike in commodities prices.
An energy price shock and central bank pivot to fight inflation in Europe has further dampened investor sentiment. Recessions now look certain in Europe as prices of gas continue to accelerate into the winter.
“This lack of energy is forecast to significantly bring down the European Union’s economy this winter. Europe in a recession will affect U.S. trade,” said Anthony Denier, CEO of Webull. “But, if Ukraine continues to post victories, the gas issue may be solved and everyone will be happy. So people are buying stock today.”
The ongoing fight in Ukraine is just one factor impacting markets in a week full of central bank news, economic policy changes and new economic data.
Still, the war could drag on for quite some time, and Ukraine’s spate of victories doesn’t mean the problems the war poses will end anytime soon. Investors have made themselves clear. Markets want to see an end to this war.
President Zelenskiy appears to understand that sentiment. He remotely rang the opening bell at the New York Stock Exchange on Tuesday as traders applauded and cheered him on.