The key US stock market indices - Dow Jones, NASDAQ, and S&P 500 - ended Tuesday with a fall. At the same time, the US dollar showed strong growth, so it was necessary to look for the reasons for such a strong movement. As we have already said in our recent articles, the ISM business activity index, which was published exactly at the time when strong movements began on world markets, could hardly provoke them. It turned out that everything was much simpler.
Yesterday, it became known that the European Union did not wait for the weekend and decided to introduce a new, fifth package of sanctions against Russia on Tuesday. Such a rush was caused by the tragedy in Bucha and several other Ukrainian towns near Kyiv, which were abandoned by the Russian military. The bodies of the killed civilians were found on the streets, the count of which goes to hundreds. This news spread all over the world and shocked the entire civilized community. The Kremlin rejected the accusations against itself and stated that when the Russian military left the Kyiv region, there were no bodies on the streets. However, satellite images from March 19 showed that when the region was under the control of the Russian army, the bodies of civilians were already lying on the streets. Moscow demanded an urgent meeting of the UN Security Council, but the UK blocked this demand. And the European Union has imposed new sanctions.
The new package of sanctions presupposes the refusal of European states from purchases Russian coal, the annual turnover of which was 4 billion euros. In addition, European countries are now prohibited from importing caviar, alcohol, wood, and several other categories of goods with an annual turnover of 5.5 billion euros. It is prohibited to export to Russia chips, computers, and other equipment for the gas industry for 10 billion euros per year. All European ports for Russian ships are being completely closed. The borders are closed for all cargo transportation from/to Russia/Belarus. Several more Russian banks are being disconnected from SWIFT. But that's not all. The head of the European Commission, Ursula von der Leyen, said on Tuesday that the European Union is working on additional sanctions, which will include the introduction of tariffs on oil and gas from the Russian Federation. As mentioned earlier, the European Union imports huge volumes of oil and gas from the Russian Federation, which cannot be replaced overnight. This is the main reason why the oil and gas embargo has not yet been introduced. However, the introduction of duties is already the first step toward an embargo. As we can see, relations between the West and Russia continue to heat up, and the markets react to them. The more serious the confrontation becomes, the stronger the demand for the dollar. Demand for stocks and indices is falling for the same reason. And because the Fed intends to do everything this year to reduce inflation, which implies a serious increase in the key rate.
