Stocks Are Stable Near The Annual Low; Oil And Commodities Rise

Models of oil drums and a pump jack are displayed in front of a stock chart and “$100” in this illustration taken February 24, 2022. REUTERS/Dado Ruvic/Illustration

LONDON, March 8 – European equities and Wall Street futures edged up slightly on Tuesday, but markets remained volatile as the prospect of a ban on Russian oil imports pushed oil prices higher and added to investors’ fears of inflation.

Since the conflict in Ukraine began on February 24, Western sanctions have cut Russia off from international trade and financial markets. More

US sources said that the administration of US President Joe Biden is ready to impose a US ban on Russian oil imports, even if European allies do not. Russia has warned that prices could rise to $300 a barrel and it could close the main gas pipeline to Germany if the West stops importing oil because of an invasion of Ukraine. More

International oil benchmark Brent crude, which briefly topped $139 a barrel in the prior session, rose about 3.6% on the day to $127.73 at 1213 GMT.

The MSCI Global Equity Index (.MIWD00000PUS), which tracks stocks in 50 countries, was down 0.1%, hitting its lowest level since March 2021 in early trading in Asia.

Benchmark German government bond yields soared, with long-term eurozone market inflation expectations rising to their highest level since late 2013.

However, as Europe rejected plans to ban energy imports, European stocks calmed down a bit.

The STOXX 600 is up 0.8% on the day (.STOXX) and the banking sector is up 5%, recovering from a yearly low in the previous session (.SX7P).

Marco Wilner, head of investment strategy at NNIP, attributed some of the improvement in sentiment to a Bloomberg report that the European Union may soon announce a plan to jointly issue bonds to finance energy and defense spending in the face of Russia’s invasion of Ukraine.

“It’s a very fragile environment, but (the EU plan) is at least one of the positive signals we’ve been waiting for,” he said.

After the worst day for the S&P 500 since October 2020 (.SPX), Wall Street futures indicated some stabilization, with S&P 500 futures up 0.7% and Nasdaq futures up 0.5%.

The yield on 10-year US bonds rose about 10 basis points to 1.85%.

“Risks are skewed to the downside, but this is a very volatile market with strong intraday moves across all markets,” said NNIP’s Willner.

Price action in the currency markets reflected heightened investor nervousness with the US dollar rising against the Australian dollar, signaling that traders are becoming increasingly pessimistic about global growth prospects. The currency market volatility indicator (.DBCVIX) jumped to a two-year high.

US oil rose 2.6% to $122.47 a barrel, while prices for many other commodities continued to rise. Gold rose above the key $2,000 level.

The London Metal Exchange (LME) halted nickel trading on Tuesday after prices doubled in just hours to a record $100,000 a ton, fueled by a short run. More

UBS Global Wealth Management recommended equity neutrality and advised clients to hold commodities, energy stocks and the US dollar as a portfolio hedge in the short term.

Rising prices for oil and other commodities have heightened investor concerns about global inflation. Data this week is expected to show that the US CPI rose a sky-high 7.9% year-on-year in February, compared with 7.5% in January. More

With growth prospects deteriorating in Europe, the euro edged up 0.5% on the day to $1.0911 after falling 3% last week to its lowest level since mid-2020.

The dollar index, which tracks the dollar against a basket of currencies from other major trading partners, was down 0.2%.

Reporting by Saikat Chatterjee; Additional reporting by Elizabeth Howcroft, Sujata Rao and Julie Zhu; Edited by Susan Fenton and Angus McSwan

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