The Russo-Ukrainian war affected commodities with oil prices soaring, adding to concerns about *stagflation.
*Weak economic growth and high inflation.
Meanwhile, equity markets slumped as investors weighed in on the impact of the Federal Reserve’s (Fed) plans on tightening monetary policy.
Commodity Market
The recent rise in energy, aluminum, copper and nickel prices, which soared after sanctions were imposed on Russia, sparked investor concerns over stagflation to the state of the economy.
Invesco’s head of global market strategy, Kristina Hooper, said investors were more afraid of the Fed’s reaction to stagflation than stagflation itself.
Meanwhile, the oil market became ‘warm’ as investors expected supply disruptions due to sanctions against Russia.
U.S. crude oil prices fell $ 2.93 at $ 107.67 a barrel while Brent oil fell $ 2.47 at $ 110.46 a barrel after a U.S.-Iran nuclear deal may add production to undersupplied markets.
In Asia, the commodity ‘boom’ lifted Australian shares by 0.49%.
Equity Markets
The U.S. stock market rose initially before falling following Jerome Powell’s explanation to a Senate committee on the effects of the war in Russia that could affect the U.S. economy.
The Dow Jones Industrial average index fell 0.29%, the S&P 500 lost 0.53%and the Nasdaq Composite was down 1.56%.
The pan-European STOXX 600 index was down 2.01% while the worldwide MSCI stock gauge closed 0.61% lower.
Government bond yields retreated as investors considered the potential for monetary tightening and assessed the impact of the Fed, European Central Bank (ECB) as well as other central banks in taming inflation.
German 10 -year bond yields rose 0.2 basis points while US treasury note yields fell 1.3 basis points at 1.825%.
Japan’s Nikkei reached 0.7% while MSCI’s broadest index of Asia-Pacific stocks outside Japan advanced 0.39%.
The currency market saw the dollar index rise 0.327% with the Euro down 0.52% at $ 1.1063 and the Yen strengthening 0.07% at 115.44 per dollar.
