Monday Market Minute | Feb 28, 2022

Russia invades Ukraine — commodity prices spike, sanctions reshape capital flows, and inflation expectations surge

What Moved

Russia launched its full-scale invasion of Ukraine on February 24, triggering the largest land war in Europe since 1945. Oil surged toward US$100, wheat prices hit multi-year highs, and Western nations imposed sweeping sanctions including SWIFT disconnections for major Russian banks. Canadian commodity producers — energy, agriculture, potash — saw immediate valuation increases. The TMX energy sector posted its best week in months as investors piled into commodity exposure.

Why It Matters

The invasion added a geopolitical inflation accelerant to an already overheating Canadian economy. For private markets investors, the calculus shifted: infrastructure and real assets with commodity linkages became essential portfolio components, while the BoC now faced the impossible task of fighting inflation without crushing an economy absorbing a global supply shock. Private credit spreads widened as uncertainty spiked, creating attractive entry points for disciplined lenders.

Signal to Watch

The BoC's March 2 rate decision — now just days away — and whether the invasion would delay the start of the hiking cycle or reinforce the urgency to combat inflation.

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