Global stocks fall, oil rises in volatile trading after Russia’s oil ban

NEW YORK (Reuters) – Global stock markets fell on Tuesday as oil prices continued to rally, spurred by the United States’ ban on Russian oil and other energy imports due to Moscow’s invasion of Ukraine.

US President Joe Biden made the announcement on Tuesday, while Britain said it would phase out imports of Russian oil and petroleum products by the end of 2022.

Brent benchmark crude for May rose to an intraday high of $131.27 a barrel before settling at $127.98 a barrel, up 3.9%, while US CLc1 crude futures settled at $123.70 a barrel, up 3.60%. Read more

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Russia, which ships 7 million to 8 million barrels per day of crude oil and fuel to global markets, has been a target of Western sanctions since its invasion of Ukraine on February 24. nL2N2VA28Q]

Russia has called its actions a “special operation” and said earlier this week that prices could rise to $300 a barrel and that it could shut down its main gas pipeline to Germany if the West blocks its oil exports. Read more

Jason McMahon, head of geopolitical risk analysis at Morning Consult, called the US ban noteworthy, but said the “real obstacle” would be Europe banning Russian energy imports.

“Given Europe’s relatively high dependence on energy supplies from Russia, such a step, if realized, would have significant economic and geopolitical repercussions,” he said.

The news added to volatility in the markets and fueled fears of rising inflation as the European and other economies slow.

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MSCI World Stock Index (.MIWD00000PUS)which measures stocks in 50 countries, is down 0.59% as of 3:50 pm ET (2050 GMT).

Dow Jones Industrial Average (.DJI) The Standard & Poor’s 500 Index fell 83.05 points, or 0.25 percent, to 3,2734.33 points (.SPX) It lost 16.03 points, or 0.38%, to 4185.06 points, and the Nasdaq Composite (nineteenth) It added 8.70 points, or 0.07%, to 12839.66 points. 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 largest in 30 years – was 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.

Gold extended its rally towards a record high on Tuesday, after investors took a direct line in the safe-haven traditional metal amid growing concerns about the Russia-Ukraine crisis. Spot gold prices rose 2.6% to $2,049.31 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

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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 1.8594%.

The euro rose 0.47 percent to $1.0903 after falling 3 percent last week to its lowest level since mid-2020.

The dollar index fell 0.112%.

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(Reporting by Elizabeth Dilts Marshall) Additional reporting by Saikat Chatterjee, Elizabeth Hoecroft, Sujata Rao and Julie Zhou; Editing by Jonathan Otis, Alexander Smith and Mark Heinrich

Our criteria: Thomson Reuters Trust Principles.

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