Even though the mercenary Wagner Group leader Prigozhin seems to have backed down by late Saturday, June 24, markets could still be jittery on Monday's opening. This is because markets don't like turmoil and uncertainty.
Over the weekend, Putin called Prigozhin's uprising and takeover of Rostov-on-Don an “armed mutiny,” Apparently reports have emerged that his rebellion has stopped. According to Prigozhin, the Wagner Group reached 200 kilometers from Moscow. But late Saturday he decided to turn his military armada around.
According to Reuters, his move was “to avoid bloodshed.” Informal reports emerged that he reached a deal with government authorities.
Reuters also reported that if uncertainty escalates there could be a rush to purchase U.S. Treasuries, gold, and even the Japanese yen. Oil prices could also rise significantly if the country is seen as unstable.
The Dow Jones Industrial Average closed down 219.68 on Friday, June 23, or 0.65%. Similarly, the S&P 500 index was off 33.56 or 0.77% to 4,348.33.
Uncertainty Could Last
One thing is for sure. No one believes that this is the end of the matter. Prigozhin seems to be quite an aggressive player and has shown that he can play poker with Putin very well.
However, Putin's reputation and Moscow's vulnerability and weakness seem to have been exposed. Moreover, the prospect of civil war in Russia still seems a possibility.
After all, Moscow seems to have been expecting a strike from the Wagner Group. Without the deal that was struck, Moscow could have been attacked. Moreover, Putin probably still sees Prigozhin as a threat, even if the deal he struck requires Progozhin to move his forces to Belarus.
Contrarian Effect on the Markets
In addition, the war in Ukraine could take another decisive turn as a result of this move by Prigozhin. His forces seemed to have been more effective than the Russian army. Now that his mercenary group will not be on the front lines, Ukraine's counter-offensive could become more dominant.
That actually will have a salutary or beneficial effect on world markets. Moreover, with Prigozhin's rebellion out of the way, markets could open positively higher on Monday. Contrarians may be willing to take positions in the market that will benefit from higher prices, lower Treasury bids, and lower oil prices.
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