As this newsletter went to press, Russia’s invasion of Ukraine was still underway and the situation remained uncertain; however, given the disparity in military strength between the two sides and the risks of escalation should NATO respond militarily, all signs point to Russia succeeding in its goal of controlling Ukrainian territory, possibly through a puppet government. 

The adventure, however, is not without cost for Russia. The sanctions announced by Europe, the U.S., and other developed countries will have an impact not only on the Russian economy but also on global markets. 

Today , February 25 , the markets returned to calm, with oil prices falling below the US$100-per-barrel threshold—which they had reached following the invasion—and the Dow Jones and S&P indices rebounding. Key factors in this development were the decision not to remove Russia from the SWIFT international payment system —a move that would have prevented Europe from purchasing gas and oil from Russia— and the U.S. State Department’s announcement that it would not impose sanctions on Russian energy exports so as not to harm American consumers.

Russia has called for diplomatic negotiations with Ukraine, but there are no signs that this will happen. Against this backdrop, analysts expect market volatility to continue as the war unfolds.