In Wall Street Warriors, students write about important aspects of the finance field as well as news in the stock market. This week, junior Bennett Szafranski discusses how war between Russia and Ukraine will impact the economy.
As the conflict with Russia and Ukraine has worsened, tensions continue to rise, and the markets continue to fall. Over the last month, The S&P 500 has fallen almost five percent. Russia is a key supplier of natural gas for western countries. President Biden has issued sanctions against Russia, mainly, getting gas from other countries. Energy prices would then arise which would cause major volatility in all financial markets.
War in Europe could cause an economic slowdown first in Eastern Europe, then expanding to Western Europe, and ultimately affecting the world at large. War could lead to an inflation of raw materials which can cut into profitability and is bad for stocks. Additionally, Russia is a major exporter of wheat and a producer of several metals. Russia in war may cause a shortage of these materials which would make them much more expensive. Most of the nations in the middle east heavily rely on Russia and Ukraine for a large amount of their agricultural needs. A disruption could cause soaring prices for wheat and aluminum in addition to the rise in inflation.
Last month, Germany put their oil pipeline on hold due to the Russia-Ukraine conflict. This pipeline was expected to double direct Russian gas exports to Germany. This made oil and gas prices rise almost three and four percent, making it the highest level since 2014. The rising demand and decreasing supply of oil are going to make these prices rise and affect the markets drastically. As the conflict continues, the markets are expected to decline as many fear inflation and oil and wheat shortages.
By: Bennett Szafranski (11th)