Strategists at TD Securities assess the market response to possible developments in Russia's invasion of Ukraine. Their analysis sets us unambiguously in the negative market implication camp.

Investors should err on the side of caution

“We see a 67% probability that the conflict escalates. This implies a 61% probability of a neutral-to-positive market response. However, once we scale the outcomes for their likely intensity, the strong negative reactions in the lower probability scenarios outweigh the slightly positive reactions in the more likely positive market scenarios, including full NATO disengagement.”

“There remains a non-negligible 39% chance that events will lead to negative market reactions. Within this cluster, we embed our worst-case scenarios that may lead to a panic reaction and, in extreme circumstances, to complete market disruption. Overall, there is a 5% chance of an extremely negative outcome.”