Economy

British businesses are sceptical that the government and EU will resolve problems at the UK border and instead believe it will fall to them to reduce costly delays, according to a survey.ClearBorder, a training consultancy, surveyed 150 mostly small companies and found that only a third of respondents were “very or somewhat confident” in the government’s ability to improve import and export procedures. But there were higher levels of faith in suppliers and the logistics industry. The report comes after the introduction of new Brexit customs checks on January 1 on goods entering the UK from the EU. Some companies have complained that the additional paperwork requirements have led to hold-ups. Christopher Salmon, founder of clearBorder and a former adviser to Brexit minister Lord David Frost and cabinet office minister Michael Gove, said the government “needed to pull its finger out” if it expected to deliver on its border strategy for 2025, which envisages a single interface for all customs declarations.“It’s all quite arcane and antiquated at the moment . . . you have systems that can’t talk to each other,” he said.“Things won’t go back to the way they were but they can be a lot better than they are now,” he added, pointing to the creation of HMRC’s online tax self-assessment system as a blueprint.Over four-fifths of survey respondents said they had experienced delays in importing goods since January 2021, and two-thirds had encountered them when exporting.

Meanwhile, a third have had goods rejected or impounded while half of importers of perishable items said they had experienced items becoming unsellable as a result of delays.“There may not be the long queues of lorries at ports that some had predicted but [that] does not mean there aren’t issues,” said Salmon.“Instead, the impact of delays is spread along the supply chain,” he added. A majority of companies are now holding more inventory, which consumes more working capital, and 38 per cent said they had established a subsidiary in the EU to make the process smoother.Salmon added that businesses had reported experiencing delays since the documentation checks began in January. He attributed this partly to lower levels of familiarity with new requirements among overseas suppliers, especially within smaller companies, but added that “there has been a spirit of muddling through as everyone learns how to run the border”.“The difference is that this time the UK is in control of the pace of implementation,” he said, contrasting its “pragmatic” approach with the EU’s introduction of full controls in January 2021.So far, UK authorities have prioritised the flow of goods and physical inspections of items entering the UK from the EU — as opposed to just the accompanying documentation. Additional customs regulations are expected from July 1.However, Salmon said that if the border processes could be speeded up, the UK would have valuable software and expertise that it could sell to the rest of the world.“I cannot think of a trade border anywhere else in the world where such a volume of trade passes through at such a rate,” he said of the Strait of Dover. More

NEW YORK (Reuters) – Western sanctions on Moscow could throw the small but lucrative Russian investment banking business that several large U.S. banks have maintained into question, lawyers said, which could deal a hit to tens of millions of dollars in fees. Major U.S. banks, including JPMorgan Chase & Co (NYSE:JPM), Morgan Stanley (NYSE:MS) and Citigroup Inc (NYSE:C), have continued to underwrite and advise on Russian deals, often alongside the investment banking arm of state-owned VTB. VTB Capital is the largest investment bank by fees in Russia.But U.S. sanctions placed on Thursday on VTB and Sberbank in the wake of Russia’s invasion of Ukraine make the prospect of doing so in the future difficult, lawyers said. That’s only been compounded by the moves to block certain Russian banks’ access to the SWIFT international payment system, announced Saturday.All the U.S. banks declined comment. Under the U.S. sanctions, any assets of VTB, including 20 subsidiaries, that touched the U.S financial system would be frozen and U.S. persons would be prohibited from dealing with them.The sanctions against VTB, which one lawyer said were as severe as those placed against terrorist organizations, would raise new reputation and compliance risks for banks doing business in Russia and make it impossible for U.S. banks to work with VTB on any deals, that lawyer said.”These are very strong sanctions on the financial system,” said Clay Lowery, executive vice president at the Institute of International Finance, a Washington-based bank group. One of the lawyers who advises financial institutions said the sanctions were “a brick wall,” and for banks there was now a reputation risk of dealing with Russia, even when it is not one of the sanctioned entities.Ross Delston, a U.S. lawyer and former banking regulator, said that the moves on SWIFT would result in Russia being viewed as “radioactive” by banks in the U.S. and Europe.Still, some see a future for U.S. banks in Russia despite the measures. A source familiar with one U.S. bank in Moscow said that they were working out how to apply the sanctions and recognized there would be an impact on how to conduct investment banking business. But the source added that the bank was not considering pulling out of the country.A source close to another U.S. bank said that even if VTB could not be in deals such as IPOs or M&A, other banks could replace it – as long as those banks are not also subjected to sanctions. That source said the sanctions were not an insurmountable problem for the international banks, adding that there were other segments of the market and sources of revenue for international banks. VTB said in a statement on Thursday that sanctions had “been a reality for us over the past few years” and the bank has “had time to learn the lessons and prepare for the most severe scenario.” The bank did not respond to follow up questions. Investment banking business in Russia has been dwindling since 2014, when the United States sanctioned Moscow for invading Crimea. But U.S. banks managed to retain a toehold in the market.Russia accounted for 0.27% of the global fee pot last year, including advisory and underwriting fees on mergers and acquisitions, equity and debt capital markets. In 2013, Russia accounted for nearly 1% of the fee pool.Even so, the number translates to sizeable fees. The investment banking arm of Russia’s No.2 bank, VTB Capital, collected $142.9 million – or a third – of the fees earned in Russia in 2021, Refinitiv data showed. JPMorgan was second overall with $32.8 million, Morgan Stanley fourth, generating $27.3 million, and Citigroup fifth with $22.8 million, while Goldman Sachs (NYSE:GS) was seventh, generating $19.5 million. More

Hello and welcome to the working week.We are living in the age of elected despots. This week the reality will become more obvious as one of their number, Xi Jinping, is elected president for an unprecedented third term at the National People’s Congress, China’s parliament, in Beijing. Xi has been flexing his muscles with his global anti-corruption crusade but this of course is nothing compared with Russian brother in arms, Vladimir Putin, who will be busy furthering his Ukraine invasion. It will be 79 years next Sunday since Joseph Stalin died, but Uncle Joe’s totalitarian principles are alive and well in the fatherland.Is there hope? Well, Christians will be beginning the long march to Easter with pancake tossing, doughnut munching, beer drinking, parades and street parties for Shrove Tuesday, Carnival or Mardi Gras depending on your particular cultural affinity, after which comes Ash Wednesday.For those more interested in the democratically elected, Emmanuel Macron is expected to announce on Monday his candidacy for the French presidential election in April — click here for an FT guide to the polls.Expect strong words about freedom a day later when US president Joe Biden delivers a slightly later than usual annual State of the Union address in Washington.In the UK, there is a by-election in the West Midlands parliamentary seat of Birmingham Erdington, triggered by the death of the Labour MP Jack Dromey. This very British of midterm election tests will be pored over for evidence of whether Labour party leader Sir Keir Starmer’s recent surge in the polls is a temporary blip or a sustained change. Remember that rumours of democracy’s death may well have been greatly exaggerated.Thank you for the emails about the unfolding Ukraine invasion and other news events. For those who have yet to share, your opinions are welcome — send emails to [email protected] dataThere will be a rush of economic data this week, although the Ukrainian invasion will cloud any future predictions. Highlights include eurozone consumer price index figures, international growth comparisons via a clutch of purchasing managers’ index reports, US labour market updates and fourth-quarter gross domestic product figures for Australia and Canada. The Reserve Bank of Australia is expected to hold rates at its monthly meeting on Tuesday but the Bank of Canada is expected to start a tightening cycle with a 25-basis-points increase to 0.5 per cent. And on Wednesday, the Federal Reserve issues its Beige Book on the US economic outlook.CompaniesActivist shareholder Elliott Advisors did not get what it wanted at Taylor Wimpey in terms of a new chief executive drawn from “external candidates who have not been a party to the underperformance to date”. Pete Redfern, who stepped down in December, was replaced by operations director Jennie Daly, who has been at the FTSE 100 company since 2014. All of this makes the housebuilder’s results announcement on Thursday potentially interesting: it could prove that Redfern’s strategy was correct and offer a way of assuaging Elliot.And gathering in person is back in Europe. The world’s largest mobile phone showcase, the Mobile World Congress, returns to its home in Barcelona for the first time since before the pandemic — both the 2020 and 2021 events were cancelled owing to Covid-19 lockdowns. Expect new product announcements from Samsung and other device makers.Key economic and company reportsHere is a more complete list of what to expect in terms of company reports and economic data this week.MondayCanada, monthly industrial product and raw materials price indicesIndia, Serbia, Switzerland: Q4 GDP figuresUK, British Retail Consortium’s monthly economic briefingResults: Bank of Ireland FY, Bunzl FY, HP Q1, Gedeon Richter FYTuesdayAustralia, central bank RBA holds its monthly meetingCanada, China, eurozone, France, Germany, Italy, Japan, UK, US: IHS Markit manufacturing PMI dataCanada, February GDP figuresGermany, retail sales figures plus February CPI dataIndonesia, February CPI dataItaly, February CPI data plus Q4 GDP figuresUK, Bank of England monthly money and credit figures plus Kantar monthly grocery market share dataResults: Bayer FY, Baidu Q4, Covestro FY, Dalata Hotel Group FY, Flutter Entertainment FY, Hormel Food Q1, Man Group FY, Swiss Life FY, Travis Perkins FY, Zalando FYWednesdayCanada, interest rate decisionEU, flash eurozone inflation data, monthly unemployment figures plus retail sales dataGermany, February labour market figuresSouth Korea, Q4 GDP dataUK, British Retail Consortium NielsenIQ monthly shop price index plus Nationwide house price indexUS, Federal Reserve chair Jay Powell testifies to the House committee on financial services plus ADP employment numbers and the latest Beige Book outlining economic conditionsResults: Aviva FY, Hiscox FY, Just Eat Takeaway FY, Kuehne+Nagel FY, Persimmon Homes FY, Piaggio FY, Sberbank Q4, Telecom Italia FYThursdayEurozone, European Central Bank Governing Council meeting minutesItaly, Japan: monthly unemployment figuresUK, quarterly CBI service sector surveyEurozone, France, Italy, Germany, UK, US: IHS/Markit services PMIResults; Admiral FY, CRH FY, ITV FY, Kion Group Q4, London Stock Exchange Group FY, Lufthansa FY, Mondi FY, Schroders FY, Taylor Wimpey FY, Thales Group FYFridayAsia, EU, France, Germany, global, UK: IHS Markit construction PMI dataBrazil, Q4 GDP dataFrance, industrial production figuresGermany, trade balance dataEurozone, retail sales figuresItaly, Q4 GDP dataUS, February employment figures plus motor vehicle sales dataWorld eventsFinally, here is a rundown of other events and milestones this week. MondayFrance, Emmanuel Macron is expected to announce his candidacy for the presidential election in April, Paris Fashion Week begins, plus an informal meeting of EU ministers responsible for cohesion policy takes place in RouenKenya, fifth session of the UN Environment Assembly meets in Nairobi to begin negotiations on a global plastic waste treatySpain, 2022 GSMA Mobile World Congress starts in BarcelonaSwitzerland, 49th session of the UN Human Rights Council begins in Geneva. French foreign minister Jean-Yves Le Drian due to speak, focusing on security concerns in Ukraine.TuesdaySt David’s DayMeteorological spring beginsHindu festival of Maha Shivratri, ‘the night of Shiva’Shrove Tuesday/Mardi Gras/Fat Tuesday celebrations ahead of the start of the Christian festival of Lent on WednesdayUnited Arab Emirates assumes the presidency of the UN Security Council for the month of MarchUK, annual rail fares increase — this year by 3.8 per cent, in line with July’s retail price index inflation rate and the biggest increase in nine yearsUS, President Joe Biden delivers the annual State of the Union address to a joint session of Congress in WashingtonWednesdayAsh WednesdayUK, FTSE Group, the global index provider, announces changes in its quarterly review of the FTSE UK Index seriesThursdayEU, first meeting of the ‘Schengen Council’ of home affairs ministers in BrusselsTibet, The Losar Festival launches celebrations of the Tibetan New YearUK, by-election in Birmingham Erdington, triggered by the death of the Labour MP Jack Dromey, plus World Book Day celebrationsUS, National Anthem Day commemorate the 91st anniversary of ‘Star-Spangled Banner’ being adopted as the country’s songFridayChina, 2022 Paralympic Winter Games start in BeijingNew Zealand, 2022 ICC Women’s Cricket World Cup beginsSaturdayChina, National People’s Congress begins its annual plenary session in the Great Hall of the People in BeijingUK, annual Million Women Rise march and rally in London to highlight male violence against women and girlsVatican City, Pope Francis presides at a public consistory for the vote on canonisationsSundayRussia, anniversary of Joseph Stalin’s death in 1953International Open Data Day about the free flow of information plus National Day of Unplugging in the US to remind people to disconnect from devices More

WASHINGTON (Reuters) – The Biden Administration will ask Congress for $6.4 billion dollars in economic and military aid to help Ukraine as it fights the Russian invasion, Democratic Senate Majority Leader Chuck Schumer said on Sunday. Schumer said the request would be added to a spending bill expected to reach the Senate floor next week. More

The US and its western allies unveiled the most punitive penalties to date against Russia, the latest in a barrage of sanctions rolled out in response to the country’s full-scale invasion of Ukraine.The measures announced on Saturday take direct aim at Russia’s central bank and seek to hobble the country’s connectivity to the global financial system. They are intended to destabilise the Russian economy, building on sanctions imposed in recent days that target oligarchs as well as its banks, high-tech companies and aircraft makers. “It’s becoming increasingly clear that Russia is going the way of Cuba and Iran in terms of the significance of the sanctions being imposed,” said Daniel Tannebaum, a former US Treasury sanctions official who is now a partner at Oliver Wyman, a consultancy.A senior US administration official added that the new measures amount to Russia “getting kicked off the international financial system” and becoming a “global economic and financial pariah”. Here is how the new restrictions may work in practice:What has been announced? The US, UK, Canada, France, Germany, Italy and the European Commission on Saturday said they would block Russia’s central bank from using its roughly $630bn stockpile of foreign reserves, harming its ability to shore up its economy and shield it from the costs associated with its attacks on Ukraine. The sanctions were announced alongside plans to eject some Russian lenders from the Swift financial messaging system, which is used to communicate the details of trillions of dollars’ worth of daily payments between banks. Their primary aim is to hamper Russia’s ability to circumvent the extensive sanctions that have so far been imposed on the country.

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“It’s a direct attempt to strike at Russia’s ability to weather out sanctions, because the way they would weather out sanctions is by relying on their reserves,” said Daniel Glaser, who served as assistant secretary for terrorist financing and financial crimes at the US Treasury department from 2011-17 and is now at K2 Integrity, a risk advisory firm. “The less control they have over their reserves or the less they could do with their reserves, the more vulnerable to the second round of pressure they become,” he added. The US and its allies have not yet specified how the new regime against the Russian central bank will work. Glaser said the most “straightforward” US method would be to add it to the Treasury’s “specially designated nationals” list — where assets of individuals and companies are blocked and US individuals and commercial banks are prohibited from dealing with them.How damaging could these restrictions be for Russia? People queue to withdraw money from Alfa-Bank in Moscow on Sunday © Victor Berzkin/APThe country’s foreign exchange reserves are a key pillar of its economic strength, and the western allies are attempting to undermine its ability to tap the stockpile. While Russia has aggressively pared down its dollar reserves, a notable chunk of its foreign exchange stockpile is held overseas in the US, Germany, France, UK, Austria and Japan.If it were unable to sell large swaths of its foreign assets in exchange for local currency, Russia would be hamstrung in its ability to defend the rouble. Elina Ribakova, deputy chief economist for the Institute of International Finance, said sanctioning the central bank could eventually lead to bank runs. Russians have already been flocking to banks to withdraw cash amid fears that the country’s financial system will seize up.“I have great confidence the effects of these measures will be felt immediately in Russian financial markets,” a senior US official said. “Market participants understand that without Russia having the ability to defend its currency, it will go into freefall.”The country’s record-high $19bn current account surplus, amassed on the back of its significant energy exports, will offer some protection. Russia continues to earn large amounts of foreign exchange via oil and gas sales, which should support the economy and help pay for imports. And the Russian central bank said it is propping up domestic lenders by offering them rouble liquidity.

Video: Russia’s invasion of Ukraine: what next? | FT Live

How is Russia’s central bank likely to react? Lacking access to the reserves to guard against the rouble’s collapse, the central bank would be left with only two clear options: raising interest rates, and capital controls. The central bank may seek help from China, where more than 14 per cent of its foreign exchange reserves are held — the biggest single foreign share. It is not clear, however, whether China will want to provide it. While rushing to Russia’s aid would undermine US dominance of global finance, Chinese banks could fear secondary sanctions that would cut off access to dollars and euros. The central bank could also try to sell a chunk of its 2,299 tonnes of gold, the fifth largest stockpile in the world, to friendlier governments. This gold is held in locations in the Russian Federation, according to the central bank. But Sergei Guriev, an economist at Sciences Po university in Paris, said selling those reserves would also be difficult.“Whoever says it will be easy to sell gold or yuans must be kidding — Chinese state banks are already blocking financing of Russian oil sales. China is afraid and rightly so of secondary sanctions. This is really a game changer,” he said.How exposed are foreign investors? A Russian LNG tanker. Moscow continues to amass large amounts of foreign currency via oil and gas sales © APThe direct exposure of western financial institutions to Russia is modest, partly due to sanctions imposed after its 2014 annexation of Crimea, as well as the rise of more investor-friendly economies in Asia.Foreign investors held $20bn of Russia’s dollar debt and rouble-denominated bonds worth $37bn at the end of 2021, according to data from the Russian central bank. Russian bonds comprise around 6 per cent of JPMorgan’s widely tracked index of emerging market local currency debt, and roughly 3 per cent of the foreign currency version. Russia only accounts for 3.4 per cent of MSCI’s widely tracked emerging markets equity index, less than Saudi Arabia or South Africa.The measures could leave Russian securities listed on overseas markets out in the cold, as banks become reluctant to permit intermediate trading and investors grow wary of adding any exposure. The local impact will be severe, according to Peter Williams, an analyst at Evercore ISI. “Russia banks and financial markets will likely face substantial stresses when they open, given the memories of the 1990s,” he said. In terms of banks’ exposure to Russia, the Bank for International Settlements estimates that foreign banks’ claims on Russian banks stands at only $29.3bn, and overall claims on Russian entities amounts to about $89bn, JPMorgan notes. That said, Europe in particular is heavily exposed to Russia’s enormous energy sector. “Russia accounts for well over 10 per cent of global oil and natural gas production and plays a significant role in European natural gas markets,” the US bank said in a report this weekend.What about cutting Russian banks from Swift?The proposal to sever a number of Russian banks from the Swift network aims to ensure those lenders are “disconnected from the international financial system”, according to the allies.This would come on top of existing, more targeted individual sanctions on Russian banks. The move follows pleas from Ukrainian president Volodymyr Zelensky for banks to be cut out of the network, making it more difficult for Russians to make cross-border transactions.

Again, the details have not been set out, but officials say they do not want to undermine western economies’ ability to purchase Russian fossil fuels, meaning there will be significant carve-outs from the Swift ban. One way of achieving this would be to permit energy-focused Russian banks to remain on the network. Has the US done something like this in the past? Yes. The US has frozen the central bank assets of hostile regimes — including Venezuela, Iran and, more recently, Afghanistan. Iranian banks were also forced off the Swift network by President Donald Trump in 2018. The Iranian sanctions could provide a blueprint for the Russian central bank ban. The sanctions, imposed by the Trump administration in 2019 after the relaxation of earlier measures imposed by Barack Obama in 2012, froze central bank assets held in custodial accounts in the US. In addition, the Iran sanctions stopped financial institutions from engaging in transactions on behalf of, or offering other services to, the central bank. “I believe we are on a conveyor belt towards Iran-style sanctions, which included this action against their central bank,” said Edward Fishman of the Center for a New American Security think-tank, before the latest moves were announced. Reporting by Colby Smith, Claire Jones, Sam Fleming, Demetri Sevastopulo, Max Seddon, Tommy Stubbington and Robin Wigglesworth More

(Reuters) – European Union foreign ministers will adopt a third round of sanctions on Russia at a virtual meeting later on Sunday, chief EU diplomat Josep Borrell said. The measures will include the exclusion of some Russian banks from the global payment system SWIFT, he said on Twitter (NYSE:TWTR). More

Markets often react strongly to geopolitical events, but then later shrug them off. Not this time. Russia’s invasion of Ukraine is a key economic turning point that will have many lasting consequences. Among them will be a quickening of the shift to a bipolar global financial system — one based on the dollar, the other on the renminbi.The process of financial decoupling between Russia and the west has, of course, been going on for some time. Western banks reduced their exposure to Russian financial institutions by 80 per cent following the country’s annexation of Crimea in 2014, and their claims on the rest of Russia’s private sector have halved since then, according to a recent Capital Economics report. The new and more aggressive sanctions announced by the US will take that decoupling much further.It will also make Russia much more dependent on China, which will use the US and EU sanctions as an opportunity to pick up excess Russian oil and gas on the cheap. China is no fan of Vladimir Putin’s war. But it needs Russian commodities and arms, and sees the country as a key part of a new Beijing-led order, something Moscow is aware of. “China is our strategic cushion,” Sergei Karaganov, a political scientist at the Moscow-based Council on Foreign and Defense Policy, told Nikkei Asia recently. “We know that in any difficult situation, we can lean on it for military, political and economic support.”That does not mean China would break US or European sanctions to support Russia, but it could certainly allow Russian banks and companies more access to its own financial markets and institutions. Indeed, just a few weeks ago, the two countries announced a “friendship without limits”, one that will certainly include closer financial ties as Russia is shut out of western markets. This follows a 2019 agreement between Russia and China to settle all trade in their respective currencies rather than in dollars. The war in Ukraine will speed this up. Witness, in the past few days, China lifting an import ban on Russian wheat, as well as a new long-term Chinese gas deal with Gazprom.All of this supports China’s long-term goal of building a post-dollarised world, in which Russia would be one of many vassal states settling all transactions in renminbi. Getting there is not an easy process. The Chinese want to de-dollarise, but they also want complete control of their own financial system. That’s a difficult circle to square. One of the reasons that the dollar is the world’s reserve currency is that, in contrast, the US markets are so open and liquid.Still, the Chinese hope to use trade and the petropolitics of the moment to increase the renminbi’s share of global foreign exchange. One high-level western investor in China told me he expected that share would rise from 2 per cent to as high as 7 per cent in the next three to four years. That is, of course, still minuscule compared with the position of the dollar, which is 59 per cent.But the Chinese are playing a long game. Finance is a key pillar in the new Great Power competition with America; currency, capital flows and the Belt and Road Initiative trade pathway will all play a role in that. Beijing is slowly diversifying its foreign exchange reserves, as well as buying up a lot of gold. This can be seen as a kind of hedge on a post-dollar word (the assumption being that gold will rise as the dollar falls). New US limits on capital flows to China on national security grounds may speed up the financial decoupling process further. If US pension funds can’t flow into China, self-sufficiency in capital markets becomes ever more important. Beijing has been trying to bolster trust and transparency in its own system, not only to attract non-US foreign investment, but also to encourage an onshore investment boom in which huge amounts of Chinese savings would be funnelled into domestic capital markets.While sanctions against Russia herald more decoupling, it is also possible that the economic fallout from the war (lowered demand, even higher inflation) would push America and other nations into succumbing to pricing pressures that would favour Chinese goods. While there is likely to be a lot of political posturing on both sides of the aisle about standing up to Russia and China, it takes a long time to decouple supply chains. Policymakers in Washington have yet to get really serious about it.Beijing, on the other hand, is quite serious about the new world order that it is pursuing. In his 1997 book, The Grand Chessboard, Zbigniew Brzezinski, the former US national security adviser, wrote presciently that the most dangerous geopolitical scenario for the west would be a “grand coalition of China, Russia, and perhaps Iran”. This would be led by Beijing and united not by ideology but by common grievances. “Averting this contingency, however remote it may be, will require a display of US geostrategic skill on [all] perimeters of Eurasia simultaneously,” he wrote.Financial markets are going to be a major field of battle. They will become a place to defend liberal values (for example, via sanctions against Russia) and renew old alliances. (Might the US and Europe come together to forge a strategy on both energy security and climate change?) They will also be a lot more sensitive to geopolitics than they have been in the [email protected] up for Rana Foroohar’s US politics newsletter, Swamp Notes, ft.com/newsletters More

LONDON (Reuters) – World markets were set for another tumultuous week after Western nations announced a harsh set of sanctions to punish Russia for its invasion of Ukraine and as fighting intensified for a fourth day.U.S. stocks have fallen nearly 8% so far this year, on track for the worst annual start since 2009, and worries over the intensifying conflict in Ukraine has shaken markets across the world.Though Wall Street ended higher on Friday with major indices up between 1.5%-2.5%, analysts expected markets to come under selling pressure on Monday. “Nobody likes uncertainty, investors certainly dislike uncertainty and we are looking at a pretty protracted conflict,” said Peter Kinsella, global head of FX strategy at UBP. “It seems to me we are in the opening stages of a new Cold War, that is pretty clear and that will weigh on sentiment for a long time.”Russian military vehicles pushed into Ukraine’s second-largest city on Sunday and explosions rocked oil and gas installations on a fourth day of the biggest assault on a European state since World War Two.In response, the United States and its allies moved to block certain Russian banks’ access to the SWIFT international payment system. The measures also include restrictions on the Russian central bank’s international reserves and will be implemented in the coming days. [PnL8N2V117C] “Friday’s bounce looked like a genuine short squeeze but Monday should bring some fresh selling pressure as the SWIFT sanctions and the growing likelihood of freezing Russian currency reserves will inflict some real financial pain across markets,” said John Marley, CEO of forexxtra, a London-based FX consultancy. The Russian invasion comes at a time when investors are already worried about expensive market valuations and hawkish central banks with world stocks falling to a 10-month low on Thursday and down more than 7% so far this year.DIALING DOWN RISKThe latest developments could also put fresh pressure on energy and grain prices, with Brent futures having topped $105 per barrel and wheat futures scaling to levels last seen in mid-2008 on Thursday before easing back somewhat on Friday. Latest weekly positioning data indicates investors frantically trying to dial down risk in their portfolios.Hedge funds cut long bets on the British pound while yen short positions were slashed, according to data from Commodity Futures Trading Commission. Separate data from Goldman Sachs (NYSE:GS) showed outflows from European-focused equity funds while flows into developed market equities fell into negative territory.Safe-haven assets will be in demand with U.S. Treasuries, German Bunds and the Swiss franc likely to see heavy buying as traders digest the implications of the latest round of sanctions. Russia’s main stock index closed up 20% on Friday after Thursday’s record 33% drop while the rouble recovered somewhat after falling to a record low on Thursday at 90 per dollar with analysts expecting more pain on Monday.”There is increased risk of a Russian debt default, last seen in 1998, as a result of weekend announcements,” said Ray Attrill, head of FX strategy at National Australia Bank (OTC:NABZY).Volatility gauges across markets, already at elevated levels, are expected to shoot higher on Monday while investor buying of derivative contracts to protect themselves against further losses are likely to surge. More