Damaged buildings in Siversk, Ukraine, on Oct. 23. At the start of the war in Ukraine, the market went into a near panic.When Russia launched its full-scale invasion of Ukraine more than 2½ years ago, just as the pandemic was ebbing, the markets went into a near panic. The S&P 500 spiralled down, and oil rose 50 per cent to US$120 a barrel. Wheat and other grains soared, too.
But investors don’t, apparently. As far as they’re concerned, the war is frozen and no longer presents an existential threat to Ukraine. Nor will it trigger a sudden shortage of key commodities, since supply lines have proven remarkably resilient. For them, the bigger risk is in theA new report by Montreal’s BCA Research said “the war in Ukraine ended – as far as the market is concerned – sometime in late 2022.” That’s a fair point.
Since then, both sides have mounted offensives and counteroffensives to scant success. Compare a map of the front lines from late 2022 with one from today and you won’t spot much difference. Neither side has a compelling advantage – it’s a stalemate, has been for the better part of two years. Yes, Russia has air superiority, but Ukraine has anti-tank Javelin missiles and ever-more-deadly drones. There is little sign that, should she win the November U.S.
If there is a bet on the war in Ukraine, it might be on Europe’s industrial sector, BCA said. Automakers, petrochemical producers and machinery companies suffered valuation beatings after the onset of the war, as gas, oil and electricity prices climbed. Despite the plunge in energy prices since then, these companies tend to trade cheaply compared with their U.S. counterparts. The European banks that are exposed to those manufacturers may also get a bounce.