How Will the Ukraine Conflict Affect Your Portfolio?

As the Russia and Ukraine conflict unfolds and stretches to its first month, what it holds for businesses is uncertain. Although it’s a bit early to predict the long-term effects, the short-term effects will play a vital role in the progress of the global economy. Stocks are dropping while gold and treasury debt is rising.

It doesn’t help that oil and other goods keep rising at this point. When the US inflation is at its all-time high, however, in as much as the disastrous impact of the Ukraine conflict might be, market strategists say the best way of business survival is to stay calm and face it.

Moreover, most successful traders and investors will do one strategy to keep up. When they’re at their lowest, buying stocks is the best action. For one thing, selling them is not the best move.

Russian control of Ukraine territory according to the Institute for the Study of War as of March 3. Follow Financial Post's live blog of the evolving global crisis and its effect on business#UkraineRussiaWar pic.twitter.com/OL9dYFDr4Z

— Financial Post (@financialpost) March 4, 2022

No one can predict how the Ukraine conflict will end up. Its effects on monetary policies and energy prices are unyielding. Although one positive note, stocks can recover quickly after stumbling from international struggles. And it is based on historical events.

Moreover, the Ukraine conflict sent major shockwaves to the international market, which led to a unanimous response from countries globally in the form of economic sanctions. The Western governments and their allies want to cut off Russia from the international financial system. As well as cutting off Putin politically.

Business deals with Russia, Belarus, and Ukraine will fell a more significant impact. With the Ukraine conflict resulting in the closure of Ukraine trade, only the essential commodities are coming into the country through Poland’s border.

Ukraine Conflict Global Effects

Ally Invest, chief market and money strategist, said, “Geopolitics rattling markets is nothing new. Typically, the immediate reaction to geopolitical events is the most dramatic. The good news is that the impact tends to be short-lived, only lasting anywhere from one to three months.”

Historically speaking, it shows that after 12 months of facing an economic crisis due to war conflicts, the market soars higher afterward.

LPL Financial chief market strategist Ryan Detrick said, “The market’s record is resilient amid times of strife.”

Derick added, “ As devastating as a major conflict could be between Russia and Ukraine, the truth is stocks likely will be able to withstand the geopolitical struggle.”

Oil as a Major Key Player

With the current Ukraine conflict, Brent crude oil prices reach an all-time high price of $100 per barrel. The last time it got this high was in 2014. Consumers should expect higher gas prices. Soon, $4 plus per gallon might be the new average oil price.

While the nominal price should stay at $100 per barrel, crude oil should need to reach $120 per barrel to adjust for inflation. As the uncertainty of how long producers can hold out making new investments surface, the oil will always be cyclical.

Kalkine Group CEO Kunal Sawhney said, “Global markets will remain choppy over the next few weeks. Thursday’s attack on Ukraine has thrown up all unforeseen possibilities until a few weeks ago.”

As of now, this is the dreading truth that investors have to face right now. With the Ukraine conflict left unresolved, sitting and planning calmly is still the best way to deal with the economic turmoil.