Russian President Vladimir Putin announced live to the nation about the partial mobilization of reserves, and this in the shadow of the progress of the Ukrainian army in the Donbas region, when in the four districts close to the border between the countries a referendum is expected to be held to decide whether to join Russia.
Putin said Moscow would support votes to join Russia in parts of Ukraine’s Donetsk, Luhansk, Kherson and Zaporizhia regions now under its control. However, the result of the “referendums” is quite predictable, since the Kremlin is responsible for the vote, in its view more than 90% of the local population in these areas would like to join Russia.
Ukraine’s Western allies said they would not recognize the results of the vote, which the U.S. described as a “sham” vote. Putin accused the West of wanting to “weaken, divide and destroy Russia” and made a thinly veiled threat to use nuclear weapons if Ukraine continued its offensive actions. the West in using “nuclear blackmail” against Russia and vowed: “If its territorial integrity is threatened, Russia will use all the means at its disposal. It’s not a bluff.”
At this time the reaction in the markets is felt in the run to safe assets. The dollar is climbing, government bond yields are falling and oil is climbing by about 2% above $86 per barrel, gold is up 0.6% to $1,681, and in Europe the indices are expected to turn red.
Gold is traditionally considered a sort of ‘refuge asset’ in times of crisis and periods of shocks in the capital markets. Indeed, with the outbreak of the crisis in Ukraine, we saw a sharp jump of about 20% in its price and an even sharper increase in the price of silver – for the full column click here.
At this early morning, the futures contracts on the leading indices in New York register slight declines of up to 0.3%, with the market’s eyes mainly focused on the Fed’s interest rate announcement this evening at 9:00 PM Israel time. What are the scenarios for the markets’ reactions following the interest rate announcement? – For the full commentary click here.