Stocks Plunge, Rocket Oil and Gold Surge Above $2,000 on Ukraine Fears
Stock markets plunged on Monday, as oil prices soared to a near 14-year high and safe-haven gold broke $2,000 as investors grew fearful of the impact of the war in Ukraine on the world economy.
Trading floors were a sea of red in early trading with pundits warning of a period of stagflation with soaring crude likely to ignite a fire under already high inflation.
At one point, the commodity soared almost 18% to $139.13 – a level not seen since mid-2008 – after US Secretary of State Antony Blinken said the White House and its allies were in talks on banning imports from Russia.
With the country being the third-largest oil producer, such a move would aggravate a supply crisis just as demand is taking off. Other raw materials from the region, such as wheat and metals, also rose sharply.
And Vitol’s Mike Muller warned of further pain.
“We have a lot of twists and turns to come,” he said in a podcast produced by Dubai-based consultant and publisher Gulf Intelligence.
“While I think the world is already assessing that there will be an inability to absorb a significant amount of Russian oil in the Western Hemisphere, I don’t think we’ve assessed everything yet.”
Until now, governments around the world have not included Russian oil in their far-reaching sanctions against Moscow due to concerns about the impact on prices and consumers, although trade has become increasingly difficult as banks withdraw funding and shipping costs rise.
The crude surge is giving central banks headaches as they begin to tighten monetary policy in the era of the pandemic to tackle inflation, which has already hit a 40-year high in the United States. United.
The International Monetary Fund warned this weekend that war and sanctions against Russia would have a “serious impact” on the global economy.
National Australia Bank’s Tapas Strickland said: “Global growth fears abound given soaring commodity prices, with ‘stagflation’ returning again in what must be like a movie. horror for a central bank.
“A key question for markets is how central banks react to higher inflation and the possibility of slower growth ahead.”
Concerns about the impact on the global economy were felt in the markets, with European stocks particularly hard hit due to the continent’s dependence on Russian energy. The euro remained stuck below $1.10 for the first time since mid-2020.
Asian stock markets were deep in the red on Monday, with Hong Kong at one point losing more than 4%, while Tokyo and Taipei lost more than 3%.
Seoul and Manila were both down more than 2%, with Shanghai, Sydney and Wellington down more than 1%. There were also heavy losses in Singapore and Jakarta. US futures were significantly lower.
The panic on trading floors sent safe havens skyrocketing, with gold – a key element in times of crisis and turmoil – reaching as high as $2,000.86, its highest level since mid-2020.
The dollar was also well up against most other currencies, while Treasuries continued to rally.
– Key figures around 02:30 GMT –
North Sea Brent Crude: UP 8.4% to $128.02 a barrel
West Texas Intermediate: UP 7.4% to $124.24 a barrel
Tokyo – Nikkei 225: 3.2% drop to 25,166.23 (pause)
Hong Kong – Hang Seng Index: DOWN 3.5% to 21,137.01
Shanghai – Composite: 1.1% down to 3,409.48%
Dollar/yen: UP to 114.90 yen against 114.78 yen on Friday evening
Euro/dollar: DOWN to $1.0850 vs. $1.0916
Pound/dollar: DOWN to $1.3200 from $1.3248
Euro/pound: DOWN 82.18 pence from 82.60 pence
New York – Dow: DOWN 0.5% to 33,614.80 (closing)
London – FTSE 100: 3.5% drop to 6,987.14 (close)