A lot could still go wrong in the Russia-Ukraine conflict. So don’t be suckered into thinking there’ll be an imminent outbreak of peace any time soon, experts say.
“From a near-term perspective, things seem to be heading in the right direction, but a lot of scenarios including some bad ones, remain plausible,” states a recent report from Academy Securities.
In other words, while there are some seemingly positives signs, they may be chimeras.
These matters should worry anyone with investments in the stock market, such as holders of the SPDR S&P 500 (SPY) exchange-traded fund which tracks the S&P 500 index. A further deterioration in the conflict could easily send stocks tumbling yet again.
The worries are legion, but three standout as particularly noteworthy.
Russian Donbas Focus Might Not Be the End Game
For instance, the increasing focus of Russian forces on the Donbas region, may lead some to believe that the Kremlin has scaled back its Ukraine goals to include just the eastern-most areas of the country. That might be a hopeful thought, but it could just as easily be an illusion. The Academy report states it as follows:
- “But it may just be Russia adopting a more achievable long-term plan, i.e., conquer the Donbass and then proceed West with better lines of communication and supply. A positive development, but it does not indicate any imminent ceasefire.” [Academy’s emphasis]
Meanwhile, Russia’s military efforts have become “more indiscriminate in their bombing.” What hasn’t happened is widespread cyberattacks as payback for western sanctions, the report states.
- “The lack of escalation should be a good thing, but the intelligence warnings haven’t stopped and Putin has “surprised” the West with his brutality in the past, so we cannot ignore this risk,” the report states. [Academy’s emphasis.]
India Is Essentially Helping Russia
There’s more bad news. India, which is an important democracy and a fast-growing economy, isn’t playing ball with the west over sanctioning Russia. The report continues:
- “India’s ongoing purchases of Russian commodities (and Russian weapons), which largely mimics their engagement with Venezuela, should give us some pause. This helps Russia continue its invasion and raises questions for the future.” [Academy’s emphasis]
Put another way, the role of India in helping Russia should be closely monitored. While there would on the face of it have been a natural fit between the U.S. and India, things haven’t turned out that way so far.
Over all, while there are some promising signs in Ukraine that could lead to peace, they could just as easily turn even nastier. Russia might be on the back foot but the matter is far from resolved.
As a result investors, might want to stay cautious in how they invest for the immediate future.
