Working Paper

Financial market reactions to the Russian invasion of Ukraine

Abstract: This article analyzes financial market reactions to the Russia-Ukraine war with a focus on the opening weeks. Markets did not completely anticipate the war and asset price reactions strengthened from the first week—when there were hopes for a quick resolution—to the second week, when prices generally peaked and began to partially revert to pre-war values. Exposure to commodity trade and trade with Russia-Ukraine determined market perceptions of the riskiness of equity and foreign exchange assets. Credit default swap prices on sovereign debt and breakeven inflation rates indicate that markets saw the war as a measurable fiscal risk even for non-belligerents.

Keywords: Russia; Ukraine; commodity price; War; oil; capital controls; exchange controls; sanctions; Exchange rate; equity;

JEL Classification: Q02; F51; G15; G32; H56;

https://doi.org/10.20955/wp.2022.032

Bibliographic Information

Provider: Federal Reserve Bank of St. Louis

Part of Series: Working Papers

Publication Date: 2022-09-08

Number: 2022-032