The return of geopolitical tension in Europe has not done markets across the world any favours. Russian equities have experienced a selloff, with the MOEX Russia Index down by a fifth since the invasion started. The Russian rouble also hit a new low against the green back, while Russian 10-year government bond yields surged to its highest in years.
These have led Tatiana Orlova and Innes McFee, lead economist and global chief economist at Oxford Economics respectively, to reduce their baseline for Russian GDP by 1.2% by 2023. MSCI, which builds indices used by the market to trade, said it would drop Russian stocks from its widely-tracked emerging markets indices, warning that the country’s equity market had become “uninvestible” as the list of sanctions grows.
Markets outside Russia fell in reaction initially. And in the week that followed, there were big swings in both directions, throwing forecasts out of whack.