strongly o close up 0.7 per cent at 7,049, while the broader All Ordinaries index was also rose 0.7 per cent to 7,323. However, this was still short of the huge rally seen overseas after the ASX closed on Friday, when Wall Street’s benchmark S&P 500 index rose 2.2 per cent, while most European markets were well above 3 per cent.
According to Michael Every, Global Strategist at Rabobank, it has become apparent that Moscow’s decision to invade Ukraine was veering towards worst-case scenarios for financial markets and the global economy, as some back away from Russian transactions owing to the possibility of further sanctions.
“Russia is being placed in the same camp as North Korea, Venezuela, and Iran,” he wrote in his latest note on the crisis. “The $620 billion-plus in FX [foreign exchange] reserves held by the Central Bank of Russia (CBR) are sanctioned too – meaning that apart from the gold and only partially-convertible CNY [Chinese yuan] it holds, the vast majority are now unavailable. Even the gold is not liquid if nobody can use FX in exchange for it.”
He added that complete collapse in the rouble is expected, with a 20 per cent drop at the open. “The expectation is runs on Russian banks and perhaps the worst economic and financial collapse since 1991, when the USSR was dissolved,” Every said.
