February 23, 2023

How the war in Ukraine affects markets  

February 23, 2023

How the war in Ukraine affects markets  

How the war in Ukraine affects markets  


The Russian invasion of Ukraine kicked off on February 24 in 2022. The ongoing, devastating conflict continues to affect global markets.  

The war has also resulted in historic policy actions such as major economic sanctions against Russia, a visit by US President Joe Biden to Ukraine, and a total reform of Europe’s energy deals.  

With the conflict passing the 1-year mark and with no signs of peace on the horizon, we look back at the war and focus on how it affects the financial market.  

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How the war in Ukraine affects markets  

No peace is sight 

As the war enters its second year, the conflict continues to have a global economic impact due to disruptions to supplies of energy and food commodities.  

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The economic fallout has been wide-ranging and has hit Russia’s oil and gas supplies. In retaliation, Russia crippled oil and wheat exports which have hit the global supply chain for these two commodities.    

These disruptions have caused significant price volatility, hitting consumers worldwide.  

Lower global outlook   

The war’s impact has negatively affected global economic growth. Global economic growth fell below the two-decade average of 3.8%, reports the annual World Economic Outlook, to 3.4% in 2022. The World Economic Outlook expects this to decline further to 2.9% in 2023.   

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Global inflation spiked to 8.8% in 2022 though it is projected to remain around 6.6% in 2023. This, however, is well above the pre-pandemic level of 3.5%. The war will result in $2.8 trillion in lost economic output in 2023, reports the Organization for Economic Cooperation and Development.  


Sanctions have crippled Russia’s economy but haven’t caused its collapse due to the country receiving support from China and Iran.   


Oil volatility  


Russian oil output comprised 14% of the world’s total supply in 2021, according to the International Energy Agency. Russia exported about 4.7 million barrels per day (bpd) of crude oil, with Europe and China as its largest consumers.  

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In February 2022, the US only imported 672,000 barrels of oil from Russia. This ended due to an executive order issued in March 2022. Russia was also the world’s fourth-largest exporter of natural gas before supplying nearly 40% of the European Union.  


Energy markets – 3 crucial developments   


  • Crude oil prices rose from $92 a barrel the day before Russia invaded Ukraine to a high of $122 a barrel in June 2022. It closed below $77 by February 23, 2023.   
  • Petrol prices spiked from $3.53 to a record high of $5.01 in June 2022 in the US. Prices have dropped back to $3.40 in February 2023.    
  • Natural gas prices more than doubled from $4.62 per million BTUs to more than $9.68 per million BTUs in August 2022. Prices have stabilized below $2.30 per million as of February 23, 2023.  


Opportunity for the US & Middle East  


The USA and major energy producers in the Middle East have filled the void for Europe; the US liquefied natural gas (LNG) exports now represent about 41% of Europe’s supplies.  

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Food insecurity – Wheat prices soar  


Food insecurity has been a major concern since Russia and Ukraine account for 30% of global wheat production. Most of the wheat is exported to countries in Africa, Asia, and the Middle East.   

Wheat was trading at around $8.00 per bushel before Russia’s invasion and reached $10 per bushel for the first time in a decade. The wheat price reached a peak of $12.47 a bushel in May 2022.    

As of February 2023, wheat prices have dropped to below $8 a bushel.  

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Ukraine war – Technical analysis on markets  

Alon Roslyakov, CMTrading South Africa Office Manager, shares his thoughts on the markets affected by the Ukraine-Russia war:       

The ongoing conflict in Ukraine, which began in 2014, has had a significant impact on the global financial markets.    

The conflict has had a significant impact on the stock markets of Ukraine and Russia. The Ukrainian stock market has been particularly hard hit, with the conflict exacerbating existing economic issues and leading to significant declines in value. The Russian stock market has also been affected, with many investors concerned about the impact of sanctions and other measures that have been imposed by Western countries in response to Russia’s actions in Ukraine.  

Stock market 

The US stock market has also been impacted by the ongoing conflict in Ukraine. While the direct exposure of US companies to the Ukrainian economy is limited, concerns about the broader geopolitical implications of the conflict have led to increased volatility in the US stock markets. Investors have been monitoring the impact of the conflict on global oil prices and its potential impact on the broader global economy. Additionally, the conflict has created uncertainties and risks for multinational corporations with significant operations in Europe, which has led to greater caution among investors. As the conflict continues, the US stock market will likely continue to be impacted by the ongoing uncertainty and risks associated with the situation.  


The forex market has been significantly impacted by the ongoing conflict in Ukraine, particularly the EUR/USD pair. The conflict has caused a decline in the value of the Ukrainian hryvnia, which has, in turn, affected the euro, the currency of Ukraine’s main trading partner, the European Union. Additionally, the conflict has led to increased geopolitical tensions, which have made investors more cautious and led to greater volatility in the EUR/USD pair. Overall, the conflict has created significant challenges for the EUR/USD pair, and this will likely continue to be the case until there is a lasting resolution to the conflict. As always, it is important for investors to stay informed about the latest developments in the conflict and to carefully consider the risks and opportunities associated with investing in the EUR/USD pair.  


After a year-long downtrend in the Euro value, we can see a bounce from USD parity lows approaching resistance levels of the 1.09 -1.1 levels. We also see a break in the upwards trendline from late last year. Moving towards the support range of 1.05 – 1.06 with the divergence in price action and the MACD indicator we look for a potential reversal set up back up to resistance levels.   


Oil and gold   

The conflict has also had an impact on the price of oil and gold. Oil prices have been affected by the conflict, with concerns about supply disruptions and other risks leading to increased volatility in the markets. Gold prices have also been affected, with many investors turning to gold as a haven asset during times of uncertainty.  


Crude Oil on the other hand had risen dramatically due to the crisis in Ukraine. However, since mid-2022 the price of oil has retraced back to its point of control at the 70–80-dollar zone. Since late last year, we see the price of oil consolidating between this range of 70 – 80 dollars. Traders can look for short-term positions as the instrument fluctuates between these 2 zones and we wait for a clear direction of a breakout or breakdown.   



Finally, the conflict has also had an impact on the cryptocurrency markets. Some analysts have suggested that cryptocurrencies like Bitcoin may be attractive to investors in countries like Ukraine, where there is political and economic instability.  

However, cryptocurrencies have also been affected by the broader market volatility that has been caused by the conflict.  


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Trading involves a significant risk of loss and is not suitable for all investors. It’s important to understand the risks and seek advice from an independent financial advisor if necessary.

The information provided here does not constitute investment advice.



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