Putin’s ‘Partial Mobilization’ Rattles Markets

(Bloomberg) — Russian President Vladimir Putin called a “partial mobilization” and vowed to annex territories his forces are occupying. In a televised address, he described the moves as “urgent, necessary steps to defend the sovereignty, security and territorial integrity of Russia.”

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Russian Defense Minister Sergei Shoigu said in a television interview that as many as 300,000 troops would be called up, with the move a gradual one. The Kremlin is set to stage hastily-organized referendums on absorbing four occupied regions in eastern and southern Ukraine as soon as this weekend in its latest escalation of the invasion.

Treasuries, gold and the dollar led gains in haven assets after Putin rattled markets that were already bracing for a super-sized rate hike from the Federal Reserve. Germany’s Robert Habeck, who is both vice chancellor and economy minister, called Putin’s order “another bad and misguided step.” He pledged that Berlin would continue to fully support Ukraine.

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Key Developments

  • Putin Vows to Use ‘All Available Means’ in Fight Over Ukraine

  • Havens Advance, Euro Drops as Putin Steps Up War: Markets Wrap

  • European Gas Jumps on Winter Risks as Putin Steps Up Ukraine War

  • Germany Nationalizes Uniper to Avert Energy Sector Collapse

  • UK Plans to Slash Wholesale Prices of Business Energy Bills

On the Ground

Russian shelling damaged infrastructure in more than 50 settlements, including Bakhmut, Zaporizhzhia and Nikopol, with Russian forces also trying to hit a thermal power plant near the city of Slovyansk in the Donetsk region, the Ukrainian General Staff said in its morning update. Ukrainian troops pushed back Russian attacks near nine settlements, according to the statement. Russia shelled the Zaporizhzhia nuclear power plant overnight, causing damage to one of the power units, the Ukrainian nuclear operator Energoatom said on Telegram. Russia hit residential buildings in Ukraine’s second largest city Kharkiv with missiles overnight, Union reported citing local authorities. Russian forces pound the dam at the Pechenihy water reservoir in the Kharkiv region, and local authorities warned of a risk of “catastrophic flooding of territories,” Unian said.

(All times CET)

West Can’t Give Up in Face of Putin’s Nuclear Blackmail, Latvia Says (10 am)

“Putin cannot come to terms with failures in his own plan for the occupation of Ukraine and on the battlefield, so he is ready to escalate the situation with both conventional threats and nuclear blackmail and other elements,” Latvian Defense Minister Artis Pabriks said in an emailed statement.

“The entire democratic world must tell Russia directly and unequivocally that no amount of fake referendums in the occupied territories of Ukraine will change our attitude towards this unjust war,” Pabriks said. “I call on all of western society not to succumb to Russia’s nuclear blackmail.”

Lithuania Urges ‘Continuous Flow’ of Advanced Military Assets (9:50 am)

Lithuanian Defense Minister Arvydas Anusauskas said the response to Putin’s decision from countries supporting Ukraine should be “a continuous flow of advanced military equipment to help the nation defend itself from genocide.”

Putin’s “three-day victorious war” has “reached the stage of mobilization after seven months,” Anusauskas said in a Facebook post. “It means the situation is really bad.”

“Partial mobilization announced by Putin from today will provide new ‘cannon fodder,’ will help replenish the units that have been almost destroyed, and will send new waves of poorly-trained troops with old tanks to combat.”

Germany Says Mobilization ‘Bad and Misguided’ (9 am)

Germany’s vice chancellor condemned Putin’s decision to order a partial mobilization and said the government in Berlin will discuss “how to react” to what he called Russia’s latest “escalation.”

“This is another bad and misguided step,” Robert Habeck, who is also the economy minister, told reporters in Berlin. “For me and for the federal government it’s in any case clear that we will continue to fully support Ukraine at this difficult time.”

Global Assets Fluctuate on Escalation of Tensions (9:20 am)

A group of global assets fluctuated on the escalation of tensions in Ukraine after Putin’s address. Both the euro and China’s offshore yuan fell, extending their modest losses on the day earlier as traders prepared for another hike by the Federal Reserve. In commodities, West Texas Intermediate crude surged above $85 a barrel after fluctuating earlier in the session. European natural gas prices also rose.

Oil Jumps on News of Partial Mobilization (8:50 am)

Oil prices spiked after Putin’s announcement. Brent rose as high as $92.57 a barrel in the London morning, a gain of about $1.75 from where it was before the news. The escalation adds another layer of uncertainty about Russian oil output because the west has already taken multiple measures targeting the Kremlin’s revenues from petroleum sales — and any further steps could impact the nation’s supply.

Wheat Extends Biggest Gain Since March as Russian Tensions Mount (8:45 am)

Wheat extended its biggest gain since March as Putin pledged the annexations. Grain traders are worried that this throws further into doubt the future of the Black Sea export corridor for Ukrainian grain, which requires the Kremlin’s approval to continue operating.

Putin Says US, Allies Seeking to ‘Destroy’ Russia (8:20 am)

The Russian President said in his televised address Wednesday that Russia is fighting the full power of the North Atlantic Treaty Organization. The US and its allies, he said, are seeking to “destroy” Russia.

“We will definitely use all means available” to defend Russian territory,” Putin said. “That’s not a bluff.” The partial mobilization will mean that reservists will be drafted into military service, Putin said, starting immediately.

Germany Nationalizes Uniper to Avert Energy Collapse (8 am)

Germany said it will nationalize Uniper SE in a historic move to rescue the country’s largest gas importer and avert a collapse of the energy sector in Europe’s biggest economy.

Chancellor Olaf Scholz’s ruling coalition is determined to ensure Uniper’s survival in the coming months, when the energy crunch could worsen as temperatures fall heading into winter.

Zelenskiy Says Fighting Initiative Belongs to Ukraine (7:50 am)

The situation on the front line “clearly indicates” that the initiative belongs to Ukraine in its war against Russia, Zelenskiy said in his regular nightly address to the nation Tuesday. He vowed more support for Ukraine’s army and intelligence service, “for everyone who is gradually restoring our territorial integrity,” according to his statement.

“Our positions do not change because of the noise or any announcements somewhere,” Zelenskiy said referring to an upcoming address by Putin. “And we enjoy the full support of our partners in this.”

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