Russian invasion of Ukraine could cause havoc on our financial markets

World events can cause havoc on global stock markets and with a Russian invasion of Ukraine looming the uncertainty of the situation is taking its toll on investors.

Milford Asset Management Portfolio Manager Mark Riggall says investors are left a "bit vulnerable" to headlines in the media from both directions.

Russian troops have been massed near Ukraine's border for a few months, with America and the UK claiming an attack is going to happen, while Russia denies it and has allegedly pulled back troops. 

However, Riggall says while it is hard to estimate the end of the situation, right now changes in the US share market are largely to do with changing outlooks for interest rates.

"This is a lot of noise… I think the moves in markets tell you more about the sentiment of the share market investors," he said.

But if Russia did invade Ukraine, inflation would take another hit.

"We know inflation is a huge problem, a Russian invasion of Ukraine world exacerbate that because energy prices would likely sore," Riggall says.

He said oil prices around the world would be affected and mainly in Europe natural gas prices would increase.

"It would exacerbate the already very severe inflation situation we've got." 

But this wouldn't change central bank action, which has been the main problem for investors this year, because banks would still have to think about writing interests rates to try and tame this inflation.