When markets opened later on Sunday, some investors were keeping an eye out for any fallout from a failed mutiny that occurred in Russia on Saturday. They anticipated a shift towards safe haven assets like US government bonds and the dollar.
After taking the city of Rostov, heavily armed Russian mercenaries under the command of Yevgeny Prigozhin, a former supporter of President Vladimir Putin and the creator of the Wagner army, pushed most of the way to Moscow before stopping, defusing a significant conflict. They started leaving the military command center in Rostov that they had taken over on Saturday night.
Since Russia attacked Ukraine in February 2022, financial markets have been prone to volatility, which has led to disruptions in markets and in worldwide finance as investors and banks sought to reduce exposure.
Given that Russia is a significant provider of energy, several investors said they were particularly concerned about the possible impact on safe-haven assets like US Treasuries and on commodity prices after the events of Saturday.
Gennadiy Goldberg, the head of US rates strategy at TD Securities in New York, said that while it stays to be seen what transpires over the next one or two days, if there is continued uncertainty around Russia's leadership, investors may seek refuge in safe havens.
Despite the de-escalation, investors may still remain worried about upcoming unsteadiness, and might stay cautious, according to Goldberg.
The incident garnered international attention and reawakened an old worry in Washington regarding what might happen to Russia's nuclear arsenal in the case of domestic unrest.
Particularly in relation to Putin and Russia, markets typically fail to react well to events which are currently unfolding and are uncertain, according to Quincy Krosby, a chief global strategist from LPL Financial.
Krosby also added that if the uncertainty increases, we will see Treasuries get a bid, gold will also get a bid, and the Japanese yen is inclined to gain during circumstances like this, referring to typical security investments that investors prefer when risks increase.
Putin has obviously been weakened, and more developments will occur, according to Alastair Winter, a Global Investment Strategist from Argyll Europe. Markets may not have responded as strongly following the de-escalation.
The market is once again betting on rate increases, decreases, and recessions in other economies, and he saw some support for the US dollar emerging.
A selloff may be more likely to occur now that stocks have been trending primarily upward for several months. The S&P 500 has gained 13% so far this year, but with rates of interest in the spotlight recently, it has slowed down. The chairman of the Federal Reserve, Jerome Powell, hinted to future interest rate increases during testimony last week.
As the crisis appeared to have been resolved, some observers observed little action. The de-escalation, according to Rich Steinberg, a chief market strategist from the Colony Group in Boca Raton, Florida, will be treated somewhat like another geopolitical risk by the markets, though it may temporarily ease some ruffled nerves.