The Impacts of the Russia–Ukraine Invasion on Global Markets and Commodities: A Dynamic Connectedness among G7 and BRIC Markets

TLDR

The Russia–Ukraine conflict has triggered global knock‑on effects, sharply disrupting commodity supplies and prices and inducing a dynamic market response that rivals the 2008 financial crisis. The study examines how the invasion reshapes dynamic connectedness among five key commodities and the G7 and BRIC stock markets. Using a time‑varying parameter VAR, the authors capture crisis‑period spillovers and uncover extreme connectedness across all commodities and markets. Results show gold, silver, and the US, Canada, China, and Brazil stock markets act as shock receivers, offering policy insights for investors and policymakers in turbulent times.

Abstract

The conflict between Russia and Ukraine has been causing knock-on effects worldwide. The supply and price of major commodity markets (oil, gas, platinum, gold, and silver) have been greatly impacted. Due to the ongoing conflict, financial markets across the world have experienced a strong dynamic regarding commodities prices. This effect can be considered the biggest change since the occurrence of the financial crisis in the year 2008, which explicitly influenced the oil and gold markets. This study attempts to investigate the impacts of the Russian invasion crisis on the dynamic connectedness among five commodities and the G7 and BRIC (leading stock) markets. We have applied the time-varying parameter vector autoregressive (TVP-VAR) method, which reflects the way spillovers are shaped by various crises periods, and we found extreme connectedness among all commodities and markets (G7 and BRIC). The findings show that gold and silver (commodities) and the United States, Canada, China, and Brazil (stock markets) are the receivers from the rest of the commodities/market’s transmitters of shocks during this invasion crisis. This research has policy implications that could be beneficial to commodity and stock investors, and these implications could guide them to make many decisions about investment in such tumultuous situations. Policymakers, institutional investors, bankers, and international organizations are the possible beneficiaries of these policy decisions.