Russia-Ukraine tensions continue to affect the global economy (Part 1 of 10)
The Ukraine crisis
At Market Realist, we’ve been following the Russia-Ukraine tensions closely and analyzing their impact on your investments in exchange-traded funds. Geopolitical tensions of this stature have repercussions on the global economy, so they’re very relevant to your ETF investments.
Investors who haven’t been following the Ukraine crisis can get an overview of the current tensions in Ukraine in our series An ETF investor’s guide to the current tensions in Ukraine. It discusses the causes of the crisis. We discussed Russia’s annexation of Crimea from Ukraine in detail in our series Must-know Ukraine crisis update: Annexation of Crimea and more . We’ve also analyzed the sanctions imposed by the US and EU on Russia. Russia’s retaliation to these Western sanctions were the topic of our follow-up series, Russia retaliates against Western sanctions .
In this series, we’ll take you through a macro perspective on the Russia-Ukraine situation, updating you on the key events that could have a material impact on your investments in exchange-traded funds like the SPDR S&P 500 ETF Trust (SPY), the Vanguard FTSE Europe ETF (VGK), the Market Vector Russia ETF Trust (RSX), the iShares MSCI EAFE Index Fund (EFA), and the iShares MSCI EMU Index ETF (EZU).
Russia-Ukraine tensions: Impact on your ETF investments
The chart above shows how the Russian, European, and US equity markets have reacted to major events in the ongoing Ukraine crisis.
The Russia-tracking RSX dipped by almost 25% on Russia’s annexation of Crimea from Ukraine. The global economy showed some resilience to that news. The VGK (Europe) and SPY (US) held their ground.
However, the sanctions on Russia from the US, Europe, and Canada have had a market-moving impact on not just the RSX (Russia), but also SPY (US) and VGK (Europe), which have shown similar dips after July this year.
Geopolitical events of this magnitude tend to have not just a regional investment impact, but also a global one reach. Investors in Russia, Europe, the US, or any other part of the world should be interested in the global implications these events for their ETF investments.
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