“We recognise there’s likely to be volatility, and that situation is rapidly evolving. In the near term, yes that’s likely to have an impact, certainly on volatility in financial markets, in funding markets, in currency markets, oil,” Mr Comyn told journalists.
“Australia is not a large trading partner, we don’t have a lot of direct exposure to that region, but clearly geopolitical risk can have broader implications.” Mr Comyn also indicated the conflict could keep petrol prices sustained at higher levels.
Daniel Moore, portfolio manager at Investors Mutual, said markets were reacting to the initial shock of Russia’s aggression, and the likelihood of more sanctions being imposed.
But in the longer-term, Mr Moore said it was unlikely Western countries would keep sanctions on Russia’s energy exports, and sharemarkets had recovered from past conflicts such as the wars in Iraq and Afghanistan.
“If you look at history, sharemarkets tend to bounce back pretty quickly from small conflicts.” he said.
The drop comes after share prices suffered sharp falls during January, as investors grappled with the risk of interest rates rising earlier than expected to combat rising inflation.
Opal capital portfolio manager Omkar Joshi said more speculative stocks had been hit hardest, as these shares were also seen as vulnerable to the threat of rising interest rates. “It’s general instability – the whole market has been looking pretty precarious for a while now,” Mr Joshi said.
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