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London CNN Business  — 

Oil prices are pulling back and stocks are jumping higher as investors take a beat to consider what Russian President Vladimir Putin might do next. But the mood on Wall Street remains anxious, with traders hooked on headlines from Ukraine.

“We’re still seeing these awful attacks, and we’re still seeing sanctions levied right, left and center against Russia,” Craig Erlam, a market analyst at OANDA, told me.

He characterized the action on Wednesday as a “minor relief rally.”

The big picture: Russia’s isolation from the rest of the world keeps growing. The West is now taking steps to cut itself off from the country’s huge energy sector. The United States announced a ban on imports of Russian oil and natural gas on Tuesday, while European Union officials said the bloc would slash imports of Russian natural gas by two-thirds this year.

Oil giant Shell announced Tuesday that it would halt new purchases of Russian crude. And iconic American brands — including McDonald’s, Starbucks, Coca-Cola and PepsiCo — said they would shut restaurants in Russia and pull products out of the country.

But the US intelligence community doesn’t think Putin is about to dial back his aggression. Director of National Intelligence Avril Haines told Congress that intelligence indicates that Putin sees the conflict in Ukraine as a “war he cannot afford to lose.”

The Kremlin said Wednesday that the United States had “declared an economic war on Russia.”

Against this backdrop, investors are gearing up for rockiness that persists for some time. The CNN Business Fear & Greed Index is in “extreme fear” territory.

“There is no clear off-ramp for Russia, hence our base case assumes many months of high uncertainty, tough sanctions and elevated energy prices,” Bank of America’s Ethan Harris told clients this week.

One major unknown is if — and how — Putin retaliates for the harsh penalties the West has levied on Russia in recent days.

The gas card: Europe hasn’t announced an embargo on oil and gas from Russia. But Moscow could pursue a preemptive strike.

Deputy Prime Minister Alexander Novak said on state television Tuesday that Russia could retaliate against European sanctions by turning off Germany’s access to Nord Stream 1, the crucial pipeline that supplies the country with natural gas.

That would roil energy markets even further. Germany, Europe’s biggest economy, gets half of its natural gas from Russia.

Export ban: Putin has issued an order to restrict or prohibit imports and exports of certain products and raw materials from Russia, though the details remain murky.

Kremlin spokesman Dmitry Peskov said Wednesday that the ban would be finalized in “the coming hours.”

“The principle is very simple: there are a lot of materials, raw materials that were brought to the Russian Federation for various production chains. Some companies curtail the implementation of their contracts, and a ban on the export of such materials from the country has been introduced,” added Peskov.

Fertilizer exports needed by farmers are getting particular attention.

Russia accounted for 10% of potash imports to the United States between 2017 and 2020, according to the US Geological Survey.

Cyberattacks: Traders are also on alert for signs that Russian hackers could disrupt the global financial system. US officials have met with executives from big banks to discuss how they might respond to any attacks.

A 2020 report from the Federal Reserve Bank of New York looked at a potential “impairment” of the wholesale payments network, the vital system financial institutions use to settle transactions with each other. It found that a breach of any of the top five US banks would have a damaging ripple effect, affecting 38% of the network on average.

The takeaway: Some investors may see moments of relative calm as a buying opportunity. But they expect it will be a long time until confidence returns in a big way.

“It’s so hard to look away from the Ukraine right now,” Erlam said. “It’s such an incredible, dominating force in the markets.”

Soaring nickel prices are another headache for carmakers

Many parts of the market are choppy right now. But the metals trade is particularly volatile.

The latest: The London Metal Exchange suspended the trading of nickel on Tuesday after prices doubled in a matter of hours to $100,000 per metric ton. The suspension remained in place on Wednesday.

“The current events are unprecedented,” the LME said in a statement, adding that it “understands market participants’ desire for the market to reopen, but also notes the market’s desire for caution.”

The exchange said it doesn’t expect nickel trading to resume before Friday.

Breaking it down: Investors had been worried about the fate of nickel exports from Russia, the world’s third biggest supplier.

But analysts attributed the extreme price action on Tuesday to what’s known as a “short squeeze.” Traders who had been betting that prices would fall were forced to buy back in to cover their losses, amplifying the rally.

The London Metal Exchange hopes that suspending trading will cool off the frenzy. But the turbulence is a reminder that technical factors can plague markets during periods of heightened churn, exacerbating any swings.

That’s not all: It could also make life even harder for automakers, which were already grappling with supply chain problems. The metal is a key component in lithium-ion batteries used in electric vehicles.

“The Russia/Ukraine war triggers further upward pressure on battery prices,” analysts at UBS said, estimating that electric cars could get $1,000 more expensive as a result of the spike in metal costs.

At the same time, the conflict is expected to boost demand for electric vehicles “in an already sold-out market” as gasoline prices soar.

Amateur investors in China bet on trade with Russia

Chinese retail investors are snapping up stocks with even the slightest link to trade with Russia, putting their money on closer economic ties between the two countries following unprecedented Western sanctions on Moscow.

Shares of more than a dozen Chinese companies that have trade ties with Russia or are close to its borders have soared in the past week, from shipping firms to port operators, my CNN Business colleague Laura He reports. Some have warned investors that their stock is now overvalued.

Gut check: Analysts have said that the upside to China-Russia trade will be limited by Beijing’s need to protect existing business ties with the West.

“Betting on a significant pick-up on China-Russia commodity trade could end in tears,” said Stephen Innes of SPI Asset Management.

But that isn’t deterring China’s ranks of small investors. Shares in Jinzhou Port, which has direct shipping routes to Russia, increased by roughly 10% — the daily limit for Chinese stocks — for seven straight trading sessions following the invasion of Ukraine. They pulled back on Tuesday and Wednesday, but are still up 60% in two weeks.

Jinzhou Port has warned investors repeatedly that its share price is too volatile and its valuation “too high” compared with peers.

Other beneficiaries: Shares of Xinjiang Tianshun Supply Chain, a logistics company for bulky goods in northwestern Xinjiang, which directly shares a 60-mile border with Russia, have rallied nearly 60% since the war in Ukraine began. Toll road operators and rail freight service firms have surged, too.

“Some Chinese investors believe that Russia now has no one else to turn to but China,” said Hao Hong, head of research at BOCOM International.

Up next

Oatly and Campbell Soup (CPB) report results before US markets open. Asana and CrowdStrike follow after the close.

Also today: How many open jobs did the United States have in January? Data arrives at 10 a.m. ET.

Coming tomorrow: The latest reading of the Consumer Price Index. Economists predict that consumer prices rose 7.9% in the year to February.