Russia-Ukraine conflict: Drone attacks on Moscow

What happened: On May 3, nearly 400 Ukrainian drones targeted Moscow in one of the largest attack waves to date, injuring at least ten people and temporarily shutting down all four capital airports. This follows a series of escalating drone strikes on Moscow and other Russian territories, including a major attack on a Moscow refinery on May 2. President Zelensky, in Washington and later at NATO, has been pushing for increased support, while Russia has threatened escalation and is expanding its buffer zone on the Ukrainian border.

Market impact: The conflict's escalation is driving energy and defense sector volatility. Russian energy exports, a significant global supply, face disruptions, impacting oil and gas prices. Defense stocks, both in Russia and Ukraine's allies, are surging due to increased military spending and demand for defense equipment. Ukrainian exports, particularly agricultural commodities, may face further disruption, affecting global food prices.

What to watch next: On May 10, Zelensky is expected to address the World Economic Forum, potentially providing updates on Ukraine's military strategy and international support. Russia's response to Ukraine's drone attacks, including any countermeasures or further escalation, will be closely watched. Additionally, the EU's decision on Russian oil imports by May 31 could significantly impact energy markets and geopolitical tensions.