NEW YORK (Reuters) – Global stock markets fell on Tuesday with oil staying near record levels after the United States banned Russian oil and other energy imports, adding to volatility and concerns about inflation.
US President Joe Biden has banned Russian oil and gas imports. Britain announced shortly before Biden’s statements that it would gradually stop importing Russian oil and petroleum products by the end of 2022.
Rising oil prices eased some news, as international benchmark Brent crude for May rose 2.29% to $122.13 at 12:45 p.m. ET (1745 GMT), down from a high of more than $139 a barrel in previous session. Read more
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Since Russia invaded Ukraine on February 24, Western sanctions have cut Russia off from international trade and financial markets. Read more
Russia, which describes its actions in Ukraine as a “special operation”, has warned prices could rise as high as $300 a barrel and could shut down a major gas pipeline to Germany if the West blocks oil imports due to the invasion of Ukraine. Read more
Jason McMahon, head of geopolitical risk analysis at Morning Consult, called the US ban on Russian oil imports noteworthy, but said the “real event” would be Europe banning Russian energy imports.
“Given Europe’s relatively high dependence on energy supplies from Russia, such a move, if implemented, would have significant economic and geopolitical ramifications,” McMahon said.
In the absence of such a ban, markets reacted positively to the US ban, reversing slightly higher in midday trading.
MSCI World Stock Index (.MIWD00000PUS)which measures stocks in 50 countries, was up 0.44%.
Dow Jones Industrial Average (.DJI) The Standard & Poor’s Index rose 444.6 points, or 1.35% (.SPX) Gained 48.35 points or 1.15% and the Nasdaq Composite Index (nineteenth) It added 229.16 points, or 1.79%. STOXX 600 Index is down 0.51% (.stoxx).
Solita Marcelli, chief investment officer for the Americas at UBS’s wealth management arm, said the increase in oil prices over the past week – the second biggest jump in 30 years – is likely to continue, causing continued market volatility.
“The Russo-Ukrainian war has driven oil prices up faster than we previously expected, but we still see a tight balance between supply and demand for crude oil globally, even if the hostilities end and the geopolitical risk relationship associated with the crude oil declines,” Marselli said.
US crude recently rose 2.29% to $122.13 a barrel, while safe haven gold prices rose 1.9% to $2,035.30 an ounce.
The London Metal Exchange (LME) suspended trading of nickel on Tuesday after prices doubled in just hours to a record $100,000 a tonne, fueled by a race to cover short positions. Read more
UBS Global Wealth Management recommended a neutral stance on stocks and advised clients to hold commodities, energy stocks and the US dollar as a short-term portfolio hedge.
The rise in oil and other commodity prices has heightened investor concerns about global inflation. Data this week is expected to show that the US Consumer Price Index rose 7.9% on an annual basis in February, up from 7.5% in January. Read more
Germany’s benchmark government bond yield rose sharply and the gauge of inflation expectations in the eurozone long-term market rose to its highest level since late 2013.
The 10-year US Treasury yield was 1.688%.
The euro rose 0.75 percent to $1.0933 after being hit, and fell 3 percent last week to its lowest level since mid-2020.
The dollar index fell 0.32%.
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(Reporting by Elizabeth Dilts Marshall) Additional reporting by Saikat Chatterjee, Elizabeth Hoecroft, Sujata Rao and Julie Zhou; Editing by Susan Fenton, Angus McSwan and Jonathan Otis
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