Ukraine war, a year on: Equity markets see negative second-order impact

Though the Russia-Ukraine war had little direct impact on global equity markets, there was a significant second-order hit. Even as most markets corrected immediately after the Russian invasion of its western neighbour on February 24, 2022, they rebounded in a month. 

Still, one-year equity returns globally, since the war began, have been subdued and marred by intense volatility. 

This is partly because of the war’s impact on global economic growth and the inflationary pressure caused by it. In the immediate aftermath of the war, oil surged over the $134 per barrel (bbl)-mark, most since 2008, on the back of the West’s coordinated sanctions on Russia, a major energy player. 

This sent panic through world markets. Fortunately, oil prices cooled off sustainably from the peak, easing inflationary and supply disruption pressures. The war has kept upward pressure on commodity prices and interest rates. 

This has benefited the equity markets of major commodity exporters, but on the other hand, has taken the sheen off major commodity importers, such as India.