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

Shares tumbled, commodity costs surged and the rouble sank after the US mentioned it was discussing a ban on oil imports from Russia and traders digested the specter of a protracted escalation in power costs.

Fairness markets in Asia began the week sharply decrease. Hong Kong’s Grasp Seng led with a fall of three.3 per cent, on monitor for its lowest shut for the reason that 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 Avenue later within the day.

Traders 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 towards the greenback, marking a contemporary report low for the Russian forex. 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 international 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 stage since 2008, earlier than paring beneficial properties 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 mentioned Washington was in “very lively discussions” with European allies. Nancy Pelosi, US Home Speaker, mentioned Congress was “exploring” laws to ban the import of Russian oil.

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

The prospect of expanded sanctions hitting Russian oil shipments has jolted international commodity markets already unsettled by the rising issue 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.

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

In Chinese language 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 report excessive of Rmb210,950 a tonne.

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