Risk Assets Retreat as Ukraine Tensions Flare

by on April 22, 2014 7:53 am BST

Global equity futures retreat from earlier gains, with the yen seeing some buying, on a flare of tensions between Ukraine and pro-Russia separatists. An international agreement to deter a wider conflict faltered today with separatists showing no signs of give.

The United States and the European Union readdress their threats of further sanctions for Russia if separatists (which is speculating to be Russian military) to clear out of previously seized government buildings in Eastern Ukraine. However, threats of additional sanctions, regardless of the threat of economic collapse, fall on deaf ears. US Vice President Joe Biden arrived in the region over the weekend, but his influence is unlikely to prove positive.

Previous sanctions, which were targeted on key Russian officials, did not have the oomph originally expected. Nonetheless, new sanctions could possibly target key Russian economic sectors, such as mining and energy. The Russian economy is already fighting high inflation and a near-record low on the ruble against the greenback, which was kick-started by the Crimea ordeal. Economists expected the Russian economy to grow 2.5 percent in 2014, but first quarter gross domestic product figures indicated a growth of just .8 percent.

Pro-Russian separatists gave an ultimatum that they would not disarm until the Ukrainian nationalist group called the Right Sector did so first. Separatists were critical of Ukraine’s attempt at a cease-fire. Yevgeny Gordik, separatist militia, said “we need dialogue. This is not dialogue. It is monologue.”

Back to the drawing board.