Rising energy prices, supply shortages and concerns about inflation have once again upset investors, causing US stocks to fall and oil prices to skyrocket.
The S & P 500 and the Dow Jones Industrial Average fell 0.7% each in early Wednesday trading. The technology-focused Nasdaq Composite fell 1%. Major US stock indexes surged on Tuesday as investors fought off concerns that inflation would drive the country’s economy into recession.
But on Wednesday, some of its confidence diminished after the international benchmark Brent crude rose again. Brent crude futures recently rose 4.6% to trade at $ 120.85 a barrel. In the transaction before the opening bell, US stock index futures shook and then fell, and losses deepened as oil prices soared.
Russia’s oil exports from Kazakhstan to the Black Sea on Tuesday could temporarily decline by about 1 million barrels per day (equivalent to about 1% of global oil demand) due to storm damage Oil prices rose after saying there was a possibility. Repairs can take up to two months, according to Russian officials.
“Things will continue to be very sensitive to what’s happening in Ukraine,” said Susannah Streeter, senior investment and market analyst at Hargreaves Landsdown, with sharp fluctuations in energy prices. He pointed out that it will continue to have a significant impact on the index. “There is still real pressure on oil prices that is fueling inflationary concerns,” she said.
Merchandise was soaring across the board on a variety of issues that could pinch the supply chain. Prices for aluminum, nickel and steel have risen due to concerns ranging from the war in Ukraine to the blockade of Covid-19 in China. Tangshan, China’s largest steelmaking city, has told residents to stay home due to the surge in Covid-19, according to Reuters. SP Angel said in a note on Wednesday that the city accounts for 58% of China’s steel production.
The sharp rise in US Treasury yields has slowed. In recent trading, yields on 10-year Treasuries fell from 2.375% the day before to 2.356%. Yields on U.S. government bonds have fallen this week after Federal Reserve Chair Jerome Powell said he was ready to raise interest rates in half-percentage steps if the central bank needed to curb inflation. It soared. When bond prices go down, yields go up.
The Russian stock market is expected to partially reopen on Thursday, almost a month after the Ukrainian invasion closed the deal. Investors and analysts anticipate that the reopening could lead to a free fall in Russian stocks.
Recently, the global market seemed to be cornered, despite rising inflation and concerns about the war in Ukraine. Tuesday’s S & P 500 was above the 200-day moving average after falling on February 17. The Benchmark Index has risen by more than 1% in 5 of the last 6 sessions and has risen by 8.1% over that period, erasing all. Of the losses seen since Russia invaded Ukraine.
Major indices in Europe and Asia are showing similar movements.
As Russia’s attacks on Ukraine intensify, recent backlash continues, Western nations continue to impose sanctions, and price pressures are showing no signs of diminishing. According to the latest data on inflation on Wednesday, consumer prices in the UK in February rose 6.2% year-on-year from 5.5% in January, the highest since March 1992.
In the European market, the Stocks Europe 600 fell 1.1%, and a strong rise in oil prices wiped out the previous rise. London’s FTSE 100 fell 0.1%. European oil giants Shell and BP each rose by more than 3.3%.
The consequences of severe economic sanctions on Russia are already felt around the world. The WSJ’s GregIp will work with other experts to explain the importance of what has happened so far and how conflicts can change the global economy.Photo Illustration: Alexander Hotts
Early trading in New York also increased the share of energy companies. Occidental Petroleum, ExxonMobil, and Chevron each increased by more than 2%.
Meanwhile, the meme stock, which fell sharply this year, has revived. GameStop shares rose 10% after company chairman Ryan Cohen revealed on Tuesday that he had purchased 100,000 shares of the company. The share of AMC Entertainment Holdings, which tends to move in correlation with GameStop, increased by 4.9%.
Adobe’s share fell 8.1%. The software company reported high profits and higher-than-expected earnings growth on Tuesday, but said it expects the war in Ukraine to hurt annual earnings.
Traders worked on the floor of the New York Stock Exchange on Tuesday.
Photo: BRENDAN MCDERMID / REUTERS
In the European bond market, benchmark 10-year German bond yields traded at around 0.497% after surpassing 0.5% this week. The last trade at that level was in the fall of 2018.
On Wednesday, there were other signs that investors were looking at assets they perceived to be safer. The ICE USD index, which tracks currencies against other baskets, has risen 0.2% in recent transactions. Gold prices have risen 0.4%.
In Asia, major indices have risen. The Hang Seng Index in Hong Kong rose 1.2% and the Nikkei 225 in Japan rose 3%. China’s Shanghai Composite rose 0.3%.
—Georgi Kantchev contributed to this article.
Write to Caitlin McCabe ([email protected]) and Scott Patterson ([email protected]).
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