Russia continues to be isolated through sanctions, but the bombing of Ukrainian cities does not stop

Last week, investors’ attention was focused on the war in Ukraine. Now it is a major geopolitical and economic tragedy. Western countries have imposed tough sanctions against Russia for its invasion of Ukraine. The world’s largest companies have ceased cooperation with the Russian market. Russia has lost international support, investors are trying to withdraw their investments from the country, but the Russian government has already introduced laws prohibiting or restricting currency withdrawal. The Moscow Stock Exchange was closed last week, and Russian securities fell by 70-100% on international exchanges.

More and more financial and technology companies are suspending their operations in Russia. At the end of last week, MasterCard and Visa stopped working with Russian banks. PayPal and Payoneer also announced their decision to suspend operations in Russia. Western sanctions against Russia have already frozen most of the $640 billion of the country’s central bank assets, suspended several banks’ participation in the global payment system SWIFT, and sent the ruble into free fall. But the Russian authorities do not stop the bombing of Ukrainian cities. Already 38 innocent children have been killed and hundreds injured in terrorist attacks against civilians.

NATO will not close the skies over Ukraine because it is afraid of being drawn into a direct conflict with Russia. As a result, civilian casualties are increasing every day. The infrastructure of cities is destroyed. The Russians are bombing schools and hospitals, kindergartens, and residential buildings. Russian soldiers know no mercy. They openly shoot at people on the street, children, journalists, and even in the humanitarian corridors. Nothing stops them. Only terrorists do this. Russian terrorists came to Ukrainian soil. Eighty years ago, everyone was afraid of the Nazis, and the word “fascism” was associated with something terrible. And now, after so many years, a new word appeared – “Russism.” However, this is not a new term. In 1995, it was mentioned by Dzhokhar Dudayev, a man who served in Russia, defended his homeland when Russia attacked Chechnya.

On Sunday, several Russian banks said they would soon begin issuing cards using China’s UnionPay card operator system in conjunction with Russia’s own “Mir” network after Visa and MasterCard said they had suspended operations in Russia. Announcements about the transition to UnionPay came from Sberbank, Alfa Bank, and Tinkoff.

According to preliminary information, anti-Putin movements are already growing in Russia. People gather to demonstrate against the war, but the small numbers allow the security forces to disperse them quickly. There is information that Russian oligarchs have begun to transfer their property to Dubai. The State Duma also registered a law prohibiting citizens aged 17 to 72 from leaving the country. Russia is also preparing to isolate the Internet. Facebook has already been blocked in Russia by the state apparatus Roskomnadzor. YouTube and other social services are also blocked. All this is done in order to hide the truth about the “military operation” in Ukraine because most Russians still do not know what is happening in Ukraine. Federal television and Roskomnadzor did everything to prevent Russians from learning the truth about the terrorist actions of their government. This is a direct path to follow in the footsteps of North Korea.

Gold continues to be at highs due to huge inflationary risks, but from the point of view of the Fed’s monetary policy, there are no prerequisites for the rise in prices for precious metals now.

Oil prices have soared to their highest level since 2008 due to delays in completing Iranian negotiations and the potential return of Iranian oil to global markets already suffering from supply disruptions from Russia. As crude oil inventories continue to decline, supply shortages are pushing up the price of “black gold.” US gasoline prices jumped 11% last week to their highest level since 2008 as global sanctions crippled Russia’s ability to export oil following its invasion of Ukraine. US President Joe Biden is considering a trip to Saudi Arabia to boost oil supplies to the global market.

Asian markets also declined last week amid rising inflation risks due to Russia’s attack on Ukraine. Japan’s Nikkei 225 (JP225) fell by 3.17% over the week, Hong Kong’s Hang Seng (HK50) decreased by 4% last week, but Australia’s S&P/ASX 200 (AU200) was the only index up +0.57% last week. China’s export growth slowed in January and February 2022 as the country celebrated the Lunar New Year. Russia’s invasion of Ukraine in late February added to uncertainty about the outlook for global trade in 2022.

In the commodities market, wheat futures (+40.62%), corn (+14.68%), sugar (+10.11%), BRENT oil (+9.54%), lumber (+9.25%), WTI oil (+9.17%), and orange juice (+5.59%) showed the biggest gains by the end of the week. The biggest drop was in coffee futures (-6.05%).

The war in Ukraine has already led to a significant increase in energy and wheat prices, as Russia and Ukraine account for a quarter of world wheat exports. This situation is likely to eventually lead to inflationary effects and a serious slowdown in global economic growth.