Commodity prices surge and shares sink as US discusses Russia oil ban

Stocks tumbled, commodity costs surged and the rouble sank after the US stated it was discussing a ban on oil imports from Russia and buyers digested the specter of a protracted escalation in vitality costs.

Equity markets in Asia began the week sharply decrease. Hong Kong’s Hang Seng led with a fall of three.3 per cent, on observe for its lowest shut because the starting of the pandemic. China’s CSI 300 fell 2.8 per cent and Japan’s Topix index shed 2.5 per cent.

Futures additionally pointed to sharp falls for European equities, with the Euro Stoxx 50 tipped to slip about 3 per cent and the FTSE 100 anticipated to fall 2.6 per cent. The S&P 500 was set to dip 1.3 per cent when buying and selling begins on Wall Street later within the day.

Investors additionally sought security within the greenback, prompting sharp falls for its friends. The rouble fell as a lot as 11.4 per cent to 138.5 in opposition to the greenback, marking a contemporary document low for the Russian foreign money. The euro dipped 0.5 per cent to $1.09 whereas the Australian greenback dropped 0.6 per cent to $0.74. Expectations of additional stress on oil importer India pushed the rupee down nearly 1 per cent in early buying and selling.

The ructions in world shares and currencies got here as worldwide benchmark Brent crude rose nearly 18 per cent to $139.13 a barrel in early buying and selling on Monday, its highest degree since 2008, earlier than paring good points to be up nearly 10 per cent at $129.45. US marker West Texas Intermediate was up 8.4 per cent at $125.41.

The surge in oil costs got here after US secretary of state Antony Blinken stated Washington was in “very active discussions” with European allies. Nancy Pelosi, US House Speaker, stated Congress was “exploring” laws to ban the import of Russian oil.

“The world is very unprepared for this shock,” stated Robert Rennie, world head of market technique at Westpac. He stated it was unclear if a US ban would cowl solely oil or all Russian vitality imports, however stated the latter would have a “catastrophic impact” on vitality costs.

The prospect of expanded sanctions hitting Russian oil shipments has jolted world commodity markets already unsettled by the rising problem of transacting with Russian suppliers. European pure gasoline futures closed Friday’s session up greater than 170 per cent for the 12 months thus far.

Other commodities together with palm oil and nickel have hit multiyear highs because the outbreak of battle. On Monday, palladium, a key part of catalytic converters in vehicles, jumped as a lot as 5.4 per cent to a document excessive of greater than $3,174 an oz.

In Chinese markets, iron ore futures rose as a lot as 7.6 per cent to Rmb874.50 ($138.53) a tonne whereas nickel rose 12 per cent to a document excessive of Rmb210,950 a tonne.

Traders dumped riskier belongings in favour of sovereign debt, pushing yields decrease. The yield on the 10-year US Treasury fell 0.03 proportion factors to simply under 1.7 per cent.

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