Accessibility/Mobile Features
Skip Navigation
Skip to Content
Editorial News
Business
Classified Sites

The Canadian Press - ONLINE EDITION

Amid fears of tit-for-tat sanctions and Russian build-up Ukraine border, investors get vexed

People pass in front of the New York Stock Exchange in this Monday, March 9, 2009 photo. Worries over Russian troops amassing near the Ukraine border caused a sharp sell-off in global stock markets on Wednesday Aug. 6, 2014. (AP Photo/Mark Lennihan)

Enlarge Image

People pass in front of the New York Stock Exchange in this Monday, March 9, 2009 photo. Worries over Russian troops amassing near the Ukraine border caused a sharp sell-off in global stock markets on Wednesday Aug. 6, 2014. (AP Photo/Mark Lennihan)

LONDON - Fears that the crisis in Ukraine is escalating into a new and dangerous phase roiled financial markets Wednesday.

Following allegations of a buildup of Russian troops on the border of Ukraine and the prospect of tit-for-tat sanctions between the West and Moscow, investors have become increasingly vexed by the situation in Ukraine.

The latest jitters, which contributed to a 1.1 per cent fall in Japan's Nikkei 225 stock average earlier and a 1.2 per cent decline in the Stoxx 50 index of leading European shares, have come in the wake of comments from Polish Prime Minister Donald Tusk that he has information indicating that there is a growing threat of a "direct intervention" by Russia in Ukraine.

Tusk's comments come a day after John Ging, director of U.N. humanitarian operations, warned the Security Council at an emergency meeting requested by Russia that the humanitarian situation in eastern Ukraine is steadily worsening as power and water supplies are scarce, homes are destroyed and health workers flee.

The fear in the markets is that Russia may use these reports of a humanitarian crisis to justify a military incursion, which would clearly ratchet up tensions with the West.

"This is the biggest fear for investors right now and explains why we're seeing more risk aversion in the markets today," said Craig Erlam, market analyst at Alpari.

However realistic these concerns are, investors are also getting vexed by fears that the sanctions imposed on Russia by the European Union and the United States could impact economically on both sides.

Europe stands to lose the most from any escalation given its big trading relationship with Russia. Already, European businesses that have ties with Russia's financial, military and energy sectors stand to lose out from the sanctions.

Even those that don't have direct links to those sanctioned sectors are cautioning over the outlook. German sportswear company Adidas, for example, recently expressed worries over the impact on its business.

So far, European companies appear to be bearing up, though analysts fear it won't take much of an increase in tensions between the West and Russia to start crimping the recovery.

"Loss of export revenues is the most obvious channel, but there may also be damage to business confidence given the heightened uncertainty," James Ashley, chief European economist at RBC Markets.

Russia already appears to be preparing retaliatory sanctions against the EU. On Tuesday, there was widespread speculation that Moscow was preparing measures to close the airspace over Siberia to European flights heading to Asia.

  • Rate this Rate This Star Icon
  • This article has not yet been rated.
  • We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high. If you thought it was well written, do the same. If it doesn’t meet your standards, mark it accordingly.

    You can also register and/or login to the site and join the conversation by leaving a comment.

    Rate it yourself by rolling over the stars and clicking when you reach your desired rating. We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high.

Sort by: Newest to Oldest | Oldest to Newest | Most Popular 0 Commentscomment icon

You can comment on most stories on brandonsun.com. You can also agree or disagree with other comments. All you need to do is register and/or login and you can join the conversation and give your feedback.

There are no comments at the moment. Be the first to post a comment below.

Post Your Commentcomment icon

Comment
  • You have characters left

The Brandon Sun does not necessarily endorse any of the views posted. Comments are moderated before publication. By submitting your comment, you agree to our Terms and Conditions. New to commenting? Check out our Frequently Asked Questions.

letters

Make text: Larger | Smaller

Election 2014
Brandon Sun Business Directory
The First World War at 100
Why Not Minot?
Welcome to Winnipeg

Social Media

Canadian Mortgage Rates