European indices were pulled lower and are now trading in the red on the day, with US futures also erasing their slight lead at the start of the session to currently be lower. The Eurostoxx, DAX and CAC 40 are all down 0.1% while the S&P 500 and Dow futures are both down 0.2% now.
While there was excitement at the start, you have to wonder when all is said and done with the tensions between Russia and Ukraine, what will be the context for actions next? Of course, the plausible answer is that one could report relief as geopolitical risks diminish. However, in the face of the narrative of rising inflationary pressures and central bank tightening, it is difficult to be overwhelmingly bullish.
Keep in mind that for all the negativity caused by the Russian-Ukrainian tensions, stocks haven’t really suffered too much overall. For example, the S&P 500 and DAX fell just 4% to Monday’s lows from Thursday’s close. So any potential relief rally might not be as strong as one might think.
Equities may have more to worry about than just geopolitical risks at the end of the day.