Market flash note on Russia-Ukraine

Irish Life Investment Managers
Tuesday, March 1, 2022

There was an escalation of events over the weekend and, as always, our thoughts first and foremost are with those in the Ukraine and with family there. Key updates:

  • Approx. 70% of Russian banks cut from SWIFT system but crucially carves out energy sector so payments can be made for gas/oil supplies from Russia
  • Freezing of Russian central bank assets so that it cannot use its reserves
  • Russian currency (ruble) is -22% today with interest rates up from 9.5% to 20%
  • European gas up 18% today and 50% in a week; Brent +5% to $103
  • While strategically important in specific areas, the combined size of Russia and Ukraine represents c.2% of global GDP
  • Key near term risk: extension of SWIFT to include energy payments or decision by Russia to cut energy supplies to Europe in retaliation for increased sanctions.