Economic shocks as Russia strikes Ukraine

In the early hours of Thursday, before launching the biggest war in Europe since World War II, Vladimir Putin addressed his nation.

Minutes after the speech, all hell broke loose.

By the time air-raid sirens began to ring out in Kyiv, the capital of Ukraine, a long line of cars had already formed on the highways, as residents began to escape the capital, the CNN reported.

Red arrows drawn on the walls, given a fresh coat of paint over the past few days, directed people towards the nearest bomb shelters.

"Peaceful Ukrainian cities are under strikes. This is a war of aggression. Ukraine will defend itself and will win. The world can and must stop Putin. The time to act is now," Ukrainian Foreign Minister Dmytro Kulebo wrote on Twitter.

However, explaining the ground for his "special military operation", Putin in his speech brought up the threat posed by the North Atlantic Treaty Organisation (NATO), and pointed out the hypocrisy of Western powers and came down hard on the United Nations Security Council.

He pointed out the many invasions carried out by the same nations that were now questioning Moscow. "First, without any approval from the UN Security Council, they carried out a bloody military operation against Belgrade...Then came the turn of Iraq, Libya, Syria," he said according to a translation of his speech by Al-Jazeera.

Ukrainian officials told CNN that more than 40 soldiers and as many as 10 civilians had been killed since the invasion began shortly before dawn.

CNN also reported seeing military vehicles entering Ukraine from a border crossing with Belarus.

At the same time, the General Staff of the Ukrainian Armed Forces claimed that five Russian aircrafts and a helicopter were shot down early Thursday, but Russia denied this through their state news agency TASS.

Putin, meanwhile, maintains that the plan is not to occupy Ukraine, declaring in his earlier address, "Whoever tries to interfere with us, and even more so to create threats to our country, to our people, should know that Russia's response will be immediate and will lead you to such consequences as you have never experienced in your history."

In Ukraine, President Zelensky made a decision to sever diplomatic ties with Russia, amid claims that the military operations were in fact an attempt to cleanse some regions of Nazis. Denazification means that Ukraine should be liberated from neo-Nazis, Kremlin Spokesman Dmitry Peskov told reporters on Thursday, reported TASS.

Terming the dealings with NATO full of  "lies and hypocrisy", the Russian president in his speech said, "Therefore, with good reason, we can confidently say that the entire so-called Western bloc, formed by the United States in its own image and likeness, all of it is an 'empire of lies'."

And with this he declared that military operations had begun. "We have been left with no other option to protect Russia and our people, but for the one that we will be forced to use today... I decided to launch a special military operation."
 
Oil goes up, stocks tumble as world economy braces for shock

Global stocks and US bond yields dived on Thursday, while the dollar, gold and oil prices rocketed higher after Russian President Vladimir Putin authorised troops to carry out a "special military operation" in the Donbas region in eastern Ukraine, reports CGTN.

The FTSE 100 fell 3% in London, France's CAC 40 dropped 4.6% and Germany's DAX 30 shed 5%, CNN reported.

Russian stocks also crashed, with the country's main index dropping 45% before recovering some losses.

The ruble also hit a record low against the dollar.

The ripples of war also reached Asia, where Hong Kong's Hang Seng Index (HSI) dropped 3.2%, its biggest daily loss in five months, various media reported. Japan's Nikkei 225 (N225) lost 1.8% and China's Shanghai Composite moved 1.7% lower.

In the US, the Dow futures were down 750 points, or 2.3%. S&P 500 and Nasdaq futures were down 2.2% and 2.8% respectively.

A bigger concern now is for energy, as Russia is considered an energy powerhouse.

Russia is the world's second-largest exporter of both crude oil and refined petroleum, the third-largest exporter of coal and fourth in natural gas.

The BBC has reported that oil prices reached $105 a barrel, their highest level for more than seven years.

Experts fear that oil prices can rise as high as $150 and gasoline prices could rise by $5 if the conflict drags on.

The price of gold has also jumped 3% to its highest price in more than a year.

Elsewhere, Nord Stream 2 AG, the operator of the Nord Stream 2 project – which has been suspended by Germany – said it may enforce compensation claims if the commissioning of the gas pipeline is prevented due to political reasons, TASS reported.

"Should the commissioning of Nord Stream 2 be prevented by political intervention, we assume that the project company will be able to enforce compensation claims. Currently, Wintershall Dea sees no reasonable scenario in which there will be political intervention without compensation," the company said.

Apart from oil and gas, food prices may also be in for a shock. Russia is the world's largest wheat exporter, and is a major food supplier to Europe.

The New York Times in a report also feared that a prolonged military conflict would push up commodity prices as economic uncertainty sets in.

Russia is also the world's biggest producer of fertilisers, with almost a quarter of the world's ammonia exports coming from Russia and it also holds sway in the markets of materials like potash, urea and phosphates, needed to produce food.

Furthermore, Russia is also a key source of most of the world's nickel and palladium: minerals needed for smartphones, car parts, batteries and the world's shift to renewable energy.

In a report, ABC noted that Ukraine was considered the "breadbasket of Europe".

The most exported product from Ukraine is corn — it is the globe's fourth-biggest supplier – and it is number one in seed oils like sunflower and cottonseed oil, the ABC reported, with experts fearing a supply crunch for those leading to higher prices.