Stock markets would suffer more from an invasion by Russia of Ukraine than the one that occurred after September 11. annexation of Crimea in 2014According to Peter Oppenheimer (Goldman Sachs Chief Global Equity Strategist), the answer is “Yes.”

Global stocks tumbled on MondayFears of an imminent invasion increased, and a lot of countries are urging Ukrainian citizens to flee the country. U.S. President Joe Biden’s national security advisor Jake SullivanOn Sunday, Ukraine was warned that an invasion could occur “anyday now”. Ukraine requested a meeting within 48 hours.

The pan-European Stoxx 600Index fell sharply Monday morning. Oppenheimer stated that European stocks would remain volatile until the uncertainty about Ukraine’s geopolitical status subsides.

U.S. stock markets indicated a sharply reduced open at Wall Street in the afternoon, while Asian-Pacific markets closed in negative territory. Also, oil prices reached a seven year high. Germany’s DAXDue to its high exposure to Russian Gas, the indices fell 3.4% Monday. This is similar to its decline in 2014.

“If we look at some of the recent episodes — if we look at the annexation of Crimea, for example — we think it pushed the risk premium up by about 20 basis points, which had roughly a 5% impact on the equity market, and this would probably be bigger,” he told CNBC’s “Street Signs Europe” Monday.

“So the sort of moves that we’re seeing – perhaps an adjustment of risk premia between 20 and 40 basis points, – that could in itself reduce the equity market by a little bit more than 5% seems reasonable.”

‘Temporary setback’

Between February and March 2014 Russia invaded and annexed the Crimean PeninsulThis triggered international protests and economic sanctions. Military experts compare the unusual buildup of Russian troops at Ukraine’s border over the past weeks with the invasion.

Holger Schmieding from Berenberg, head economist, stated, “When Russia moved towards Ukraine in the second half of 2014 economic sentiment barely wobbled.”

Real GDP growth decreased from 0.4% quarter to quarter in Q1 2014. to 0.2% during Q2 2014 before rebounding to 0.5% in Q3. This temporary setback might be worse this time.

Schmieding observed that Russia may be a powerful military power and has great economic potential. But, Russia isn’t yet an important market for Europe. Germany exported 1.9% of its goods to Russia while Poland exports 5.6%.

“Relative all other factors that will affect the eurozone’s economic performance (omicron receding and supply chain issues slowly easing Fed rate increases), some losses in trade with Russia due to sanctions or counter sanctions would likely not have any impact on Europe’s growth outlook for the next one-two months,” he said.

Berenberg believes that European markets will soon rebound after any possible attack.

‘Twin troubles’

The global markets are in a rocky state since last year’s turn. They took another downturn towards the end of last Week after an explosive U.S. Inflation print led to speculation that the Federal Reserve might be forced into raising interest rates aggressively, which could lead to a more drastic increase than anticipated over the next few months.

A Monday publication by Hargreaves Lansdown, a British online stockbroker, showed sharp drops in investor confidence between January-February.

Susannah Streeter, Senior Investment and Markets Analyst, said that sentiment fell due to the twin troubles of rising prices and imminent conflict.

Streeter stated that investors have been doubly scared by the possibility of European war.

A new surge in European gas prices could also be expected should conflict erupt, which would increase the cost-of-living squeeze. This could affect consumer confidence.