Russia’s invasion of Ukraine sent global markets into chaos.

The Russia Trading System index, a benchmark index consisting of 50 of the most actively traded Russian stocks on the Moscow Exchange, fell more than 50% since last week. It dropped 38% the day of the invasion and rallied 32% in after-hours trading the next evening.

Other markets show similar patterns of extreme volatility. Below is a chart of crude oil futures. News of the invasion led to an immediate jump of 9% in the futures market, and oil briefly topped $100 per barrel. The price quickly gave back some of those gains.

Crude Oil Futures

Russia-Ukraine oil futures chart

Within hours of the first reports of the battle for Kyiv, oil was trading at the level it was at before the tanks crossed the Ukrainian border.

Traders reacted to news. There seems to be a pattern of overreaction and correction unfolding in the markets. It’s creating large swings with no clear trend.

Traders React to the Russia-Ukraine Conflict

Traders, while concerned with events in Ukraine, expect the situation to remain relatively stable outside of that country. This is reinforced by the news that Russia will face economic sanctions, but the sanctions target the Russian elites and shouldn’t create hardships for the country’s population.

Ukraine likely won’t receive military support to help repel the attack, and the government may not survive another week. This outcome, while tragic, shouldn’t have a significant effect on the global economy.

Traders like to say the market hates uncertainty. In this war, there seems to be little uncertainty. Russia is almost certain to win, and there shouldn’t be any major escalation.

Traders don’t seem to be worried about the long-term fate of Ukraine. They will soon be back to worrying about inflation and the Federal Reserve.

Michael Carr is the editor of True Options Masters, One Trade, Peak Velocity Trader and Precision Profits. He teaches technical analysis and quantitative technical analysis at the New York Institute of Finance. Follow him on Twitter @MichaelCarrGuru.

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