LONDON, March 3 – Oil prices rose again on Thursday as Ukraine’s war spurred goods that may be in short supply as stock markets fell as investors worried about higher inflation. and slowing economic growth.
Brent crude rose more than 5 percent to $ 120 a barrel and is now rising nearly 20 percent during the week as everything from coal to natural gas and aluminum rises as Western countries tighten sanctions on Russia after its invasion in Ukraine. Russia calls its actions a “special operation.” Read more
“Russia supplies about 30% of Europe’s gas and oil imports and accounts for about 11% of world oil production,” said Shane Oliver, head of investment strategy at AMP Fund Manager. “In short, investors are worried about a stagflationary shock.”
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MSCI added to Russia’s financial isolation by deciding to exclude the country from its emerging markets index, while FTSE Russell said Russia would be removed from all its indices.
Fitch downgraded Russia’s sovereign credit rating by six notches to “garbage” status, saying it was unsure the country could service its debt, and Moody’s soon followed suit. Read more
European stocks fell in the open, failing to follow the late Wall Street rally after Federal Reserve Chairman Jerome Powell said the central bank would raise interest rates by 0.25% this month, less than 0.5%. which some investors have pledged.
Not all investors are worried that inflation will remain higher in the medium term.
In terms of inflation, we believe that leading consumer prices are likely to peak in the next month or two, “said Mark Hefele, chief investment officer, UBS Global Wealth Management, which he said will allow the Fed to raise interest rates. at a pace that does not undermine economic recovery.
Euro STOXX fell 0.45% (.STOXX), while the FTSE 100 weakened 0.47% (.FTSE).
Wall Street futures showed a slightly weaker opening.
In Asia, the rush to commodities boosted resource-rich Australian stocks (.AXJO) by 0.49%, while Indonesia (.JKSE) was slightly above record highs.
Japan’s Nikkei (.N225) rose 0.7 percent, while MSCI’s broadest Asia-Pacific equity index outside Japan (.MIAPJ0000PUS) rose 0.42 percent.
In foreign exchange markets, the euro fell 0.3% to $ 1.1076, close to its 21-month low as investors dumped European assets fearing the impact of the war in Ukraine on the region’s economy.
The euro and gas prices
The dollar index rose 0.2% to 97,622.
Powell warned on Wednesday that the Fed may need to rise more aggressively if inflation continues to rise.
That pulled some of the asylum from government securities, and the 10-year yield returned to 1.87%, from Tuesday’s two-month low of 1.682%.
European bonds have also turned down some of their recent huge gains after data showed that eurozone inflation reached a record 5.8% in January, making it difficult for the ECB to keep policy super loose.
Inflation was also on the mind of the Bank of Canada when it started the tightening cycle on Wednesday, raising interest rates by a quarter to 0.5%. Read more
This move, combined with the strength of oil prices, briefly lifted the Canadian dollar to a five-week high of $ 1.2554. Other commodity-related currencies also benefited from the Australian dollar at a four-year peak against the euro.
Gold stood at $ 1,923 an ounce and is still up 2% from the week before thanks to the search for safe haven.
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Additional reports from Wayne Cole in Sydney. Edited by Jane Merriman
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