Asian stocks and US futures It settled on Wednesday as investors focused on the US and UK ban on Russian oil, sending crude higher. Inflation risks put sovereign bonds on the defensive.
Shares in Japan and Australia rose, while European contracts were higher and US contracts moved slightly. Volatility was once again the dominant topic in the US with the S&P 500 closing lower after rising nearly 2%.
Oil rose after the United States decided to ban imports of Russian fossil fuels in response to the invasion of Ukraine. The UK will also ban Russian barrels, and gradually natural gas and coal. West Texas Intermediate (WTI) crude jumped to $125 a barrel, close to the highest level since 2008.
The turmoil in goods continues due to war and sanctions against resource-rich Russia, which cut it off from the global economy. Large supply disruptions and the resulting inflationary shock could stifle global growth.
Bonds in Australia and New Zealand were followed by declines in Treasuries, as well as in Europe, where The European Union is discussing a plan to jointly issue bonds on a potentially massive scale to finance energy and defense spending. Gold as a traditional safe haven has fallen from its highest level in 19 months. The dollar was stable.
War and turmoil in commodity flows indicate continued volatility across a variety of assets. Commodity costs underscore the inflation challenge of the US Federal Reserve, which is expected to raise interest rates next week. In Australia, central bank governor Philip Lowe said a rate hike later this year was “reasonable” as the war in Ukraine creates a new supply shock.
“The length of this run will really affect the economies of both Europe and the United States,” Victoria Fernandez, chief market strategist at Crossmark Global Investments, said on Bloomberg TV. He added that the company was cautious but was in the market trying to be “opportunistic”.
The Fed is expected to raise interest rates by 25 basis points. The breakeven rate on 30-year inflation-linked Treasuries, an indicator of what the market sees as the annual pace of average consumer price increases over the next three decades, rose to its highest level since 2013.
Federal Reserve Challenge
“The Fed doesn’t seem to be taking a break with the inflation problem it’s trying to solve by raising these rates, so it doesn’t seem likely that we’ll see the Fed less aggressive over the next year or so,” said Joanne Finney, managing director. Capital Management Advisors Firm Portfolio Report on Bloomberg Television.
Meanwhile, Coca-Cola Co. (KOJoin McDonald’s Corp. (DCM), Starbucks Corporation (SBUX) and several other companies to suspend their operations in Russia in protest of the war. Credit rating agency Fitch has downgraded Russia’s credit rating and said a bond default is “imminent”.
The United States said that Russian forces intensified their bombing of the Ukrainian capital, Kyiv. The suspension of trading in the Russian stock market has been extended in an attempt to prevent prices from falling in the wake of sweeping international sanctions, while foreign exchange trading is scheduled to reopen.
London Metal Exchange sTrading in nickel was suspended on Tuesday due to significant price swings and the market is not expected to reopen before March 11th.
Here are some of the main events to watch this week:
- Korean presidential elections on Wednesday. closed markets.
- Crude oil inventory report from the Energy Information Administration, Wednesday
- China’s total finance, producer price index, consumer price index, money supply, new renminbi loans, Wednesday
- European Central Bank President Christine Lagarde, after the policy meeting, on Thursday
- US Initial Jobless Claims Thursday
Some of the main movements in the markets:
- S&P 500 futures were little changed at 9:42 am in Tokyo. The S&P 500 fell 0.7%.
- Nasdaq 100 futures were down 0.1 percent. Nasdaq 100 index fell 0.4%.
- Japan’s Topix rose 0.6%
- Australia’s S&P/ASX 200 Index is up 0.8%
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Russian forces intensify their bombing of Kyiv
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