Conditions in Ukraine are rapidly deteriorating. Russia has confirmed it was conducting a “special operation” to protect the eastern Donbas region (which was recognized as its own just days ago), citing the need to “demilitarize” Ukraine and accusing the U.S. of crossing its “red line” by expanding NATO. Military facilities have been targeted across the country, including airfields and anti-aircraft systems, and while the developments are hard to confirm, there are already reports of casualties. Airstrikes and explosions have hit the capital of Kyiv, as well as more than a dozen other cities.
Land, air, and sea: Ukraine’s border service said its soldiers came under attack along the country’s frontiers with Russia and neighboring Belarus, while tanks have crossed the border with Crimea. Reports additionally suggest that Russian Navy troops have landed in Odesa and are also crossing the border in the city of Kharkiv. Russian cyberattacks are meanwhile hitting the country, with Ukrainian officials citing an intensifying hacking wave of destructive software.
The government in Kyiv is calling it a “full-scale invasion,” with Ukraine’s ambassador to the UN saying “it’s too late for de-escalation.” That’s prompted Ukraine to declare martial law and close its airspace to civilian flights. The military also announced that it shot down five Russian warplanes and one helicopter, though Moscow denied any of its aircraft were hit.
Our Commentary: “What we’ve seen since the election of President Zelenskyy, is that Russia had its hopes raised that this was someone they could work with and that could unblock the Minsk II peace process that governed the conflict in eastern Ukraine,” said Zach Witlin, senior analyst at Eurasia Group. “Instead, Zelenskyy has gone from what was thought in Russia, as a Russian-speaking, perhaps even Russian-tolerant president, to a vehemently anti-Russian president. Putin is calculating that he is at risk of losing Ukraine and does not want that to be part of his legacy.”
Global markets update
The conflict in Ukraine is roiling many sectors across the globe, with investors fearing contagion in all parts of the market. Stock index futures in the U.S. dropped precipitously overnight, with contracts linked to the Dow and S&P 500 off 2.5%, while the Nasdaq slid over 3%. Equities in Europe are doing worse, with the Euro Stoxx 50 plunging 5% after bourses posted earlier losses across Asia.
Commodities: Ukraine and Russia are also big exporters of precious/industrial metals, as well as grain, but a military blockade could risk significant shipments from Black Sea ports. Aluminum topped its 2008 peak by climbing nearly 3% to $3,388 a ton in London, while gold hit its highest level in more than a year, rising 3.3% to $1971.30. Nickel also advanced 2.4% to $25,085 a metric ton on the news. Palladium climbed 4.4% to $2,547 a troy ounce in New York, while wheat futures soared 5.7% to $9.35 a bushel in Chicago, and corn prices rose 5.1% to $7.16.
Over in Ukraine: The National Bank of Ukraine limited cash withdrawals to 100K hryvnia a day, equivalent to about $3,339.13, and will fix the official exchange rate for Thursday. Activity on Ukraine’s PFTS Stock Exchange was postponed, while the yield on a Ukrainian dollar bond maturing in September 2027 doubled over the last 24 hours to 32.060%.
Over in Russia: The Russian ruble fell to its absolute historical low, crossing the mark of 90 rubles per dollar. In the cash market, the rate approached close to 100 rubles per dollar, prompting Moscow to announce a currency intervention. Meanwhile, Russia’s stock market has lost nearly 40% of its value today — and at one point was down nearly 45%. It’s one of the biggest single-day meltdowns in modern market history. Also, Russian billionaires lost 38.162 billion dollars in the last 36 hours.
Crypto: In the crypto space, Bitcoin plunged 9.1% to $35,313, while Ethereum went down 13% to $2,374 and XRP is off 12% to $0.641629 but is in recovery with BTC at 37- 38k price area as of press time.
Bonds: Bonds caught a flight-to-safety bid, however, with the yield on the 10-year Treasury falling 10 basis points to 1.88%.
World Leaders and Powerful statements.
Russia’s Vladimir Putin: “I decided to conduct a special military operation. Its goal is the protection of people who over the past eight years have suffered abuse and genocide from the Kyiv regime. We urge you to lay down arms immediately and go home. I will explain. All servicemen of the Ukrainian army who comply with this requirement can freely leave the area of military action and return to their families. Whoever would try to stop us and further create threats to our country, our people, should know that Russia’s response will be immediate and lead you to such consequences as you have never faced in your history. We are ready for any situation that arises. All necessary decisions in this regard have been made. I hope that I will be heard.”
Ukraine President Volodymyr Zelenskyy: “Dear Ukrainians, this morning Russian President Putin announced a special military operation in Donbas. Russia carried out strikes on our military infrastructure, on our border guards. Explosions were heard in many cities in Ukraine. We introduced martial law throughout the state. I had a conversation with President Biden… The U.S. is starting to gather international support. Today, we need each of you, each of you to be calm. If possible, stay at home, please. We are working. The army is working. The entire security and defense sector of Ukraine is working. Don’t panic. We are strong. We are ready for everything, and we will defeat everyone because we are Ukraine. Glory to Ukraine.”
President Biden: “President Putin has chosen a premeditated war that will bring a catastrophic loss of life and human suffering. Russia alone is responsible for the death and destruction this attack will bring, and the United States and its Allies and partners will respond in a united and decisive way. The world will hold Russia accountable. I will meet with my G7 counterparts in the morning and then speak to the American people to announce the further consequences the United States and our Allies and partners will impose on Russia for this needless act of aggression against Ukraine and global peace and security. We will also coordinate with our NATO Allies to ensure a strong, united response that deters any aggression against the Alliance.”
EU’s President Ursula von der Leyen: “We will not let President Putin tear down Europe’s security architecture. He should not underestimate the resolve and strength of our democracies. The European Union stands with Ukraine and its people. Ukraine will prevail. We condemn this barbaric attack, and the cynical arguments used to justify it. Later today we will present a package of massive, targeted sanctions. The sanctions will target strategic sectors of Russia’s economy. We will freeze Russian assets in the EU and stop the access of Russian banks to our financial market. This is designed to take a heavy toll on the Kremlin’s ability to finance the war.”
NATO chief Jens Stoltenberg: “Once again, despite our repeated warnings and tireless efforts to engage in diplomacy, Russia has chosen the path of aggression against a sovereign and independent country. This is a grave breach of international law and a serious threat to Euro-Atlantic security. I call on Russia to cease its military action immediately and respect Ukraine’s sovereignty and territorial integrity. NATO Allies will meet to address the consequences of Russia’s aggressive actions. We stand with the people of Ukraine at this terrible time. NATO will do all it takes to protect and defend all Allies.”
UN chief António Guterres: “This is the saddest moment in my tenure as Secretary-General of the United Nations. I started this meeting of the Security Council addressing President Putin and telling him from the bottom of my heart: Stop your troops from an offensive against Ukraine, give peace a chance because too many people have died, I must say, President Putin: In the name of humanity bring your troops back to Russia. In the name of humanity, do not allow starting in Europe what could be the worst war since the beginning of the century, with consequences not only devastating for Ukraine, not only tragic for the Russian Federation, we cannot even foresee concerning the consequences for the global economy in a moment when we are emerging from the COVID (pandemic) and so many developing countries need to have space for the recovery which would be very, very difficult, with the high prices of oil, with the end of exports of wheat from Ukraine, and with the rising interest rates caused by instability in international markets”.
French Foreign Minister Jean-Yves Le Drian: President Vladimir Putin, when making threats about using nuclear weapons, needs to understand that NATO, too, is a nuclear alliance.
Thank you and pray for Ukraine
We will keep you updated as the events unfold, as the outcome of this conflict will have huge implications for the world, the health of the global economy and geopolitics.
