The impact of the military conflict in Ukraine has not only affected the country but has also disrupted the global economy and markets around the world. We can see the deterioration in energy, food, stock and currency prices.
In terms of currencies, the euro has suffered, but the dollar has strengthened over the past year as a safe haven in times of uncertainty. Since the start of the war in Ukraine, the dollar has risen against a basket of currencies. In the immediate aftermath of the invasion, we also saw a surge in US and European bond prices as investors sought safety in the highest quality assets.
With the advent of the war came the energy crisis, with prices of everything from oil to coal to natural gas rising at a rapid pace. Natural gas prices in Europe were 700% higher in August than a year ago.* Higher energy costs and the overall inputs for food production have driven their price levels to dizzying heights. Many European countries are reporting inflation above 20%. Over the past year, four of the five food sub-indices - cereals, meat, dairy products and vegetable oils - have reached really high levels.
Performance of Wisdom Tree Natural Gas during last 5 years. (Source: Investing)
* Past performance is no guarantee of future results.