The second day of the crisis was much calmer on the stock exchanges

Today the mood in the stock markets is much better than yesterday. The stock exchange in Warsaw and stock exchanges in Europe are catching up. Too Petroleum cheaper. History shows that geopolitical events, while most tragic, have little lasting impact on the markets.

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.

Stock exchanges are catching up

Yesterday, stock exchanges reacted in panic to the invasion of Ukraine. Stock exchanges in Central and Eastern Europe reacted the most. Moscow Stock Exchange recorded a decrease of 30 percent. (which was the largest one-day decline in the world's major stock exchanges in history) and the WIG20 fell by more than 10%. The farther from the place of conflict, the calmer it is. German DAX index and the French CAC40 closed the day with a 4 percent decline, while the American S & P500 ultimately grew 1,5 percent after initial declines. However, during the day there was a dramatic volatility. VIX Volatility Index, which recently remained above 30, at yesterday's opening it rose to the level above 35.

Today, however, the mood is calmer. At. 11:00 WIG20 grows by 3,3%, FTSE100 by 1,7%. DAX by 0,6 percent and CAC by 0,8 percent. This confirms that geopolitical events, although the most tragic, have little lasting impact on the markets. Often times, markets are still burdened with ongoing tension than the tragic event itself. For example, in 2014, during the crisis related to the annexation of Crimea, the S & P500 index recorded its minimum two weeks before the start of the Russian invasion (which began on February 20, 2014).

Although the global sustained impact is not large, the most current conflict affects the Central and Eastern European stock exchanges and the commodity market. Brent crude oil rose yesterday, for the first time since 2014, to above $ 100 a barrel, now it is $ 95. The price began to decline as oil supplies from Russia were not disrupted, and sanctions against Russia did not affect the commodity market, as expected.

Concerns about the economic situation

While sentiment today is better than yesterday, markets are currently dealing with a toxic mix of concerns about higher inflation, lower economic growth and more uncertainty. The Ukrainian crisis adds to the serious concerns about inflation and the first interest rate hike in the US, which is likely to occur on March 16. It is worth remembering, however, that the fundamental data remains good - we are just finishing a very good season of results for the fourth quarter of 4 and economies are reopening after the pandemic. Many companies' valuations are now lower than a few months ago and the market has already priced in a series of rate hikes through FED.