The key indices of the US stock market - Dow Jones, NASDAQ, and S&P 500 - ended Thursday without major price changes. There was an extremely small amount of news yesterday and almost all of them concerning geopolitics. Not even geopolitics, but new sanctions against the Russian Federation. The sanctions war between the West and Russia continues and so far looks like a "one-way game". However, it is the introduction of sanctions by the European Union against Russia that raises more and more questions every day. The fact is that a very strong split in opinions is brewing in Europe. First, at least three EU countries do not support the introduction of an energy embargo against Russia. These are Germany, Austria, and Hungary. Second, as stated by Michel Borel and Guy Verhofstadt, the European Union has helped Ukraine with 1 billion euros since the beginning of the war. This is the same amount the European Union transfers to Russia for energy every day. Third, the European Parliament voted almost unanimously yesterday to impose a full embargo on hydrocarbons from Russia, and the European Commission headed by Ursula von der Leyen postponed the ban on coal supplies from Russia to August. There are clear differences between the various political institutions in the European Union. As a result, what is voiced by European politicians is very different from what the European Union is doing.
As mentioned in previous articles, the embargo on coal supplies from the Russian Federation has been severely criticized around the world and even in the European Union itself. That is, the sanctions, which are introduced in principle to push the Kremlin, will work in a few months? Why not in a year or two? What is the point of such sanctions? And here it should be remembered that the European Union is very dependent on Russian energy resources and is trying to sit on two chairs at the same time. On the one hand, he does not want to give up hydrocarbons from the Russian Federation, since there is nothing to replace them overnight. On the other hand, he cannot refuse to support Ukraine. The result is a situation where the European Union pays both Ukraine and Russia as if stimulating the continuation of hostilities.
Meanwhile, more and more international military experts believe that this military conflict will drag on for many years. This point of view was expressed in particular by Mark Milley, Chairman of the Joint Chiefs of Staff of the United States. He said that "the war will be long and exhausting." "At the moment, there are no steps taken by Moscow towards de-escalation of the conflict, and Ukraine will not put up with the loss of its territories," Milley said. Thus, as we said earlier, this whole conflict can turn into "Donbas 2.0". In this case, Europe is almost guaranteed to face a food and energy crisis, and how it will deal with high inflation is generally unclear. Anyway, if the geopolitical situation does not improve, this is an additional factor in favor of falling stock markets in both the US and the EU.
