Oil rallies, Asia stocks fall as Ukraine talks make little headway

FILE PHOTO: A broker reacts while trading at his computer terminal at a stock broking firm in Mumbai
FILE PHOTO: A broker reacts while trading at his computer terminal at a stock broking firm in Mumbai, India December 11, 2018. REUTERS/Francis Mascarenhas

March 8, 2022

By Julie Zhu

(Reuters) – Oil prices faltered and Asian stocks fell on Tuesday as peace talks in Ukraine made little headway and the prospect of a ban on oil imports from Russia fueled investor fears about inflation and slowing economic growth.

President Joe Biden’s administration is poised to push ahead with a US ban on Russian oil imports even if its European allies don’t, Reuters reported Monday, citing two people familiar with the matter.

Oil prices are already at 14-year highs and Russia has warned that if the West halts oil imports over the invasion of Ukraine, prices could soar to $300 a barrel and close the main gas pipeline to Germany.

The broadest MSCI index of Asia-Pacific stocks outside of Japan shed 0.4% in early trade, following a painful session on Wall Street. Japan’s Nikkei slipped 0.3% while Australian shares fell 0.24% amid a sea of ​​red in Asian markets.

Chinese blue chips lost 0.15%, while Hong Kong’s Hang Seng index rose 0.39%.

International oil benchmark Brent Crude, which briefly topped $139 a barrel in the previous session, bounced around in morning trade, rising about 0.8% to $124.20.

U.S. crude rose about 0.4% to $119.86 a barrel, while prices of many other commodities, including nickel, rose as industrial buyers and traders crowded in as the Russia-Ukraine conflict showed no signs of abating .

“Global risk sentiment started the week on a very negative note, before improving as European leaders announced they would oppose sanctions on Russian energy exports and instead favor a determined strategy to reduce dependence on Russian imports,” said ANZ analysts in a note.

“However, markets are volatile and very sensitive to shifts in tone. The continued rise in breakeven inflation rates is evidence of growing inflation concerns as commodity prices remain firmly underpinned.”

Russia is calling its actions in Ukraine a “special operation,” but the move has triggered sweeping sanctions from the United States and Europe aimed at isolating Russia on a scale never seen before by such a large economy.

Overnight, Wall Street’s main indices fell sharply, with the Nasdaq Composite confirming that it was in a bear market. The Dow Jones Industrial Average fell 2.37%, the S&P 500 lost 2.95% and the Nasdaq Composite lost 3.62%.

U.S. payments company shares slumped on Monday, with American Express Co shedding 8.0% after it announced on Sunday it would halt all operations in Russia and Belarus, and joined Visa Inc, which fell 4 .8% fell, and Mastercard Inc, which fell 5.4% after similar announcements the previous day.

The benchmark 10-year Treasury yield rose to 1.7648%, compared to Monday’s US close of 1.749%. The two-year yield, which rises on traders’ expectations for higher Fed fund rates, hit 1.5563% compared to a US close of 1.548%.

The rally in oil and other commodity prices will only add to global inflationary momentum, with data this week expected to show the US CPI rose a stratospheric 7.9% yoy in February, up from 7.5% in January.

As prospects for European growth dimmed, the shared currency rose 0.1% on the day to $1.086 after taking a hit last week, falling 3% to its lowest level since mid-2020.

The dollar index, which tracks the greenback against a basket of currencies from other major trading partners, rose to 99.215.

Gold was slightly lower. Spot gold was trading at $1,989.3546 an ounce. [GOL/]

(Reporting by Julie Zhu, Editing by Richard Pullin) Oil rallies, Asia stocks fall as Ukraine talks make little headway

Caroline Bleakley

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