(REUTERS/Gleb Garanich TPX IMAGES OF THE DAY)
People look into a destroyed house after shelling earlier this week near the front line, near the city of Novoluhanske in the Donetsk region of Ukraine.
An armed clash between Ukraine and Russia, coupled with punishing sanctions for Moscow, could push U.S. stocks toward another major loss, according to Goldman Sachs economists.
The S&P 500 entered correction territory Tuesday, down 10% from its last peak, as investors weighed the conflict and fresh U.S. and U.K. sanctions on Russia. For the year, it’s down over 9%.
In a note this week, Goldman economist Dominic Wilson said the S&P 500 could drop 6.2% in a scenario in which the crisis escalates and “outright conflict” breaks out. The tech-heavy Nasdaq Composite, meanwhile, could plunge 9.6%. The benchmark is already off over 14% this year.
“Although Russia/Ukraine tensions appeared to affect primarily local assets in January, spillovers to global assets have been much more obvious in February,” the analyst note said. “If risks flare up further, and we shift to an outright conflict scenario coupled with punitive sanctions, the build in political risk premium would very likely extend.”
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The current Russia military buildup around Ukraine. (Fox News)
Ukraine’s Ministry of Foreign Affairs is warning its citizens across the border in Russia to depart “immediately” Wednesday as uncertainty surrounds Russia’s next military moves.
“In connection with the intensification of Russian aggression against Ukraine, which, among other things, may lead to significant restrictions on the provision of consular assistance in the Russian Federation, the Ministry of Foreign Affairs recommends that Ukrainian citizens refrain from any trips to the Russian Federation,” it said in a statement.
“We emphasize that ignoring these recommendations will make it much more difficult to ensure proper protection of Ukrainian citizens in the Russian Federation,” the statement added.