Ukrainian President Zelensky's statement, indicating a shift in focus towards contingency plans should Russia prolong the conflict, signals a potential hardening of geopolitical stances and a reduced likelihood of near-term de-escalation. This transmission mechanism primarily impacts risk appetite and geopolitical risk premiums, as the prospect of an extended conflict increases uncertainty regarding regional stability and economic sanctions. Assets most exposed include Russian equities and sovereign debt, which could face sustained downward pressure due to continued sanctions and capital outflow risks, alongside Ukrainian bonds and currency, which remain highly sensitive to war-related developments. Traders will closely monitor any official communications from NATO or G7 nations regarding further sanctions or military aid packages, as well as any direct responses from the Kremlin, for indications of escalating or de-escalating rhetoric.
Ukraine’s president says attention should shift to plans if Russia refuses to end the conflict.
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