US stock indexes fell and bond yields fell on Tuesday as oil prices rose to multi-year highs as Russia’s invasion of Ukraine continued to pass through markets.
Stock markets were shattered in 2022, with the S&P 500 and Nasdaq posting their worst bienniums from March 2020 to the beginning of the year. The war in Ukraine has further exacerbated investor sentiment: although only 1% of S&P 500 companies’ revenues come from Russia and Ukraine, according to FactSet, investors are still worried about the turbulent effect on the global economy. The geopolitical crisis came when economies were already facing the highest inflation in decades, huge pressure on central banks to raise interest rates.
“We now have this shock, and this shock involves the biggest risk: sustained high inflation,” said John Mayer, chief investment officer at Global X ETFs.
The S&P 500 fell 67.68 points, or 1.5%, to 4,306.26 on Tuesday. The Dow Jones Industrial Average lost 597.65 points, or 1.8 percent, to 33,294.95, while the technology Nasdaq Composite fell 218.94 points, or 1.6 percent, to 13,532.46.
Oil prices rose above $ 100 a barrel to their highest level since 2014. Brent crude, the international oil figure, rose $ 7 a barrel, or 7.1%, to $ 104. $ 97. European reference gas prices jumped by more than 24%. Members of the International Energy Agency agreed on Tuesday to release supplies from oil reserves in a bid to contain rising crude oil prices.
Shares of energy companies rose along with oil prices, with Occidental Petroleum rising $ 3.06, or 7%, to $ 46.79 and Chevron adding $ 5.72, or 4%, to $ 149.72. According to oil executives, bankers and traders, refineries have refrained from buying Russian oil, while banks have refused to finance supplies of Russian goods. Russia is the largest exporter of gas and a major supplier of crude oil.
The assets of a safe harbor were sought after, raising gold prices and putting pressure on government bond yields. Gold prices rose $ 43 an ounce, or 2.3 percent, to $ 12.40.40. Yields on US 10-year benchmarks fell to 1.708 percent on Tuesday, its fourth-lowest close this year, with investors betting the Federal Reserve won’t act so aggressively to curb inflation. German government bond yields fell in negative territory for the first time since January. Yields decrease with rising bond prices.
The decline in government bond yields also dragged down bank stocks. The KBW Nasdaq Bank index of major US commercial creditors lost more than 6%.
Global stock indices have been volatile in recent days as investors try to assess the potential global economic impact of the invasion and the resulting sanctions. Limited supplies of Russian goods could boost inflation, but investors hope the overall effect on the world’s largest economies will be dampened.
“We are in a situation where I do not believe there is a real book,” said Eric Merlis, managing director of corporate risk decisions at Citizens.
Bitcoin prices rose 5.3 percent to $ 43,869.58 from 5pm on Monday. The invasion of Ukraine sparked a demand for cryptocurrencies, helping to raise bitcoin and other coins.
The Russians are queuing up to use ATMs as ordinary citizens begin to feel the impact of Western allies’ sanctions on the country following Moscow’s invasion of Ukraine. Meanwhile, the Moscow Stock Exchange remained closed on Tuesday. Photo: AP Photo / Dmitry Lovetsky
In the corporate news Target‘s
shares jumped $ 19.66, or 9.8%, to $ 219.43 after the trader reported strong sales during the holiday season. Albertsons rose $ 2.25, or 7.7%, to $ 31.40 after the supermarket chain said it had launched a strategic review. The human resources software company Workday earned $ 11.28, or 4.9%, to $ 240.33, after reporting earnings late Monday that exceeded forecasts.
“The question here is, can the economy continue to push forward through these segments and avoid contractions?” Said Matt Stucky, senior portfolio manager at Northwestern Mutual Wealth Management Company.
Ceasefire talks have so far yielded no concrete results. Russia and Ukraine have agreed to further talks, and investors have welcomed the fact that some have taken place. However, Moscow is pouring manpower and equipment into the country, and Russian forces have adopted a strategy to break up civilian areas in an attempt to demoralize the resistance.
“I am not sure what we will see from the negotiations, but there will be no stopping on the ground, because [Russian President Vladimir] “Putin needs to leave this war with something to show,” said Hani Redha, a portfolio manager at PineBridge Investments.
New York Stock Exchange traders on Monday.
photo:
Allie Joseph / Nyse / Zuma Press
Russian markets have been hit hard by the invasion and subsequent sanctions, with investors dumping Russian stocks. The sharp, sudden rise in interest rates from the country’s central bank helped the ruble fall. Tradeweb Markets Inc.
a leading bond trading platform, removed Russian securities on Tuesday, citing Western sanctions.
The Russian ruble withdrew against the dollar on Tuesday after falling nearly 30% on Monday. Market data services showed limited price updates this week, suggesting that few transactions are taking place. Russia’s stock market, which collapsed last week, remained closed. This has created a gap between the pricing of some funds with large exposures to Russia and the value of their underlying assets.
In Europe, the pan-continental Stoxx Europe 600 fell 2.4%. The London Stock Exchange has suspended trading in shares of Russia’s VTB Bank after the exchange announced that the Bank of New York Mellon had resigned as the company’s depository. JPMorgan Chase also stopped trading two funds due to the crisis in Ukraine.
In the Asia-Pacific region, stock markets were mixed. Japan’s Nikkei 225 rose 1.2 percent, while Hong Kong’s Hang Seng rose 0.2 percent.
Write to Hardika Singh at [email protected] and to Will Horner at [email protected]
Copyright © 2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8