President Vladimir Putin warned Ukraine against continuing its anti-separatist offensive after government troops killed five rebels and prompted Russia’s military to begin new drills on the two nations’ border.
“If it’s true that the current regime in Kiev sent the army against citizens inside its country, then it is a very serious crime against its own nation,” Putin said today in St. Petersburg. “It will have consequences for the people who make such decisions, including relations between our countries. We’ll see how the situation develops and we’ll make conclusions based on the reality on the ground.”
Ukrainian Interior Ministry and army troops destroyed three road blocks as they fought pro-Russian separatists in the Donetsk region city of Slovyansk, the ministry said today on its website. Russia’s latest drills are a response to events in eastern Ukraine and involve warplanes near the border, Defense Minister Sergei Shoigu said, according to Interfax.
An agreement to disarm rebels signed last week in Geneva by Ukraine, Russia, the European Union and the U.S. is on the brink of collapse. President Barack Obama said today the U.S. and its allies have additional sanctions against Russia ready to go because Putin’s government has yet to abide by the accord.
Russia’s Micex Index (INDEXCF) fell for a fourth day, losing 2.5 percent at 5:33 p.m. in Moscow and taking its decline since Putin’s intervention in Crimea started March 1 to 10.4 percent.
So far, stock markets have been relatively unaffected by this problem, Russia excepted. Elsewhere, it is viewed as a minor, local conflict that is only simmering. Historically, stock market investors and traders have only been influenced by regional crises while they are perceived to be worsening.
There is a cold eyed logic to that response. After all, we live in a turbulent world and most crises are someone else’s problem, at least most of the time. That can even benefit other markets on occasion. In the global economy, misfortune will most likely cause some investors in the troubled region to seek safer havens for their capital in other countries, especially where monetary policies are accommodative, governance reasonably sound and market trends favourable.
However, more markets will eventually reflect deteriorating conditions during potentially serious conflicts, such as we currently have with Russia’s aggression against Ukraine.
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