Over the weekend, there was no capitulation of the Ukrainian armed forces, and harsh sanctions against Russia arrived. The European Union, the United States, Great Britain, and Canada have decided to exclude some Russian banks from the SWIFT messaging circuit through which trillions of money pass.
Japan also said yesterday that it would join the initiative. The agreement includes measures to prevent the Russian central bank from taking the field and its international reserves, thus weakening the scope of sanctions.
The most disruptive effect is on the ruble, which has not yet opened this morning, but Bloomberg reports that the decline on the few foreign platforms that trust to deal with it is in the order of 30%.
Ukraine wants peace, and is ready to continue negotiations with Russia that also involve a possible neutrality status of the country concerning NATO membership. Ukrainian presidential adviser Mykhailo Podolyak told Reuters.
The European Central Bank is closely monitoring the evolution of the conflict in Ukraine. It will carry out a comprehensive assessment, including the latest events, preparing for the Governing Council meeting in March.
This was stated by the president of the ECB, Christine Lagarde, pointing out that the Frankfurt Institute will implement, within her mandate, all the sanctions decided by Brussels. Lagarde then assured that the ECB 'is ready to take any decision necessary to defend price and financial stability.
Hot Stocks and Instruments
EUR/USD: The exchange rate is approaching the new annual lows in the 1.11 area.
Coinbase (NASDAQ:COIN): The bitcoin platform reported earnings per share of $ 3.32, above expectations of $ 1.85. Revenues amounted to € 2.5 billion, above the estimates of € 1.94 billion. The company expects a weak first quarter.
USD/RUB: New record for the exchange rate in area 118.
UniCredit (OTC:UNCRY), Intesa Sanpaolo (OTC:ISNPY): The United States and allies have decided to block some Russian banks from accessing the Swift international payments system as a further move to sanction Russia after the invasion of Ukraine. The measure will be implemented in the coming days and includes restrictions on the Russian central bank's international reserves.
Conclusions
Concerning the conflict, Putin is an intelligent man with a law degree and a master's degree in economics. That said, the hefty sanctions that are hitting Russian finances and causing shareholders to lose a lot of money with the collapse of the stocks and the ruble will make Putin opt for common sense. I, therefore, expect an end to the conflict in the near future that will lead to a rally on the stock exchanges.
On EUR/USD, pay attention to the ECB today. The sanctions imposed are also detrimental to Europe, and monetary policy could be less restrictive than expected in the coming months. This means less strength for the euro, with new lows in the 1.08 area well within reach.
Regarding Coinbase, the data are good, but the Outlook or the prospects are what count in this case and are weak. Furthermore, Bitcoin is not seen as a safe haven. In fact, in recent days, it has suffered, unlike gold. The price is attractive, but it's not the time to buy.
On USD/RUB, I expect an end to the conflict soon, thanks to diplomacy. This will give strength to the ruble.
Concerning Intesa and Unicredit (MI:CRDI), the sanctions that provide for the blocking of the Swift, if not temporary, can cause severe damage to their financial statements. However, I expect sanctions to be lifted shortly after hostilities between Russia and Ukraine. At these prices, these two titles are worth buying.