US stocks fell and oil prices jumped as concerns about rising energy prices, shortages of supplies and inflation rattled investors again.
The S&P 500 ticked 0.5% down Wednesday, while the Dow Jones Industrial Average fell 0.7%. The technology-focused Nasdaq Composite Index lost 0.2 percent. Major US stock indices jumped on Tuesday as investors withdrew from concerns that inflation will push the country’s economy into a recession.
On Wednesday, however, some of that confidence disappeared after Brent crude, the international benchmark, rose again. Futures at Brent Oil recently traded at $ 121.60 per share. barrel, an increase of 5.3%. In pre-opening trading, futures for US stock indices faltered and then ticked down, with losses deepening as oil prices jumped.
Oil prices rose after Russia said on Tuesday that oil exports via a pipeline from Kazakhstan to the Black Sea could temporarily fall by about 1 million barrels a day – representing about 1% of global oil demand – citing storm damage. Repairs can take up to two months, Russian officials said.
“Things will remain very sensitive to the events unfolding in Ukraine,” said Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown, noting that sharp movements in energy prices will continue to weigh heavily on the indices. “There is still real pressure on oil prices, which is exacerbating inflation problems.”
Commodities rose across the board on a series of issues that threatened to squeeze supply chains. Aluminum, nickel and steel prices rose due to concerns ranging from the war in Ukraine to Covid-19 lockdowns in China. Tangshan, the largest steel-making city in China, asked residents to stay home because of a Covid-19 rise, according to Reuters. The city accounts for 58% of China’s strip steel production, London commodities broker SP Angel said in a Wednesday note.
“Inflation is still the 800-pound gorilla,” said Doug Sandler, global strategy manager at RiverFront Investment Group. The concern is that rising prices will force the Federal Reserve to raise interest rates faster than investors had previously expected, he said.
Mr. Sandler said his firm began pairing its stockpiles earlier this year because of concerns about a more risky, more uncertain environment for the U.S. and global economy. The hope, he said, is that supply chain problems that have pushed up the price of everything from corn to copper will resolve themselves in the coming months, reducing the need for sharply higher Fed-fund interest rates.
A sharp rise in US government bond yields slowed. The yield on the 10-year US government bond fell to 2.357% in recent trading, from 2.375% the day before. US government bond yields zoomed higher this week after Fed Chairman Jerome Powell said the central bank was ready to raise interest rates by half a percentage point if necessary to tame inflation. Interest rates rise when bond prices fall.
Russia’s stock market stands to have a partial reopening on Thursday, almost a month after it closed trading after the country’s invasion of Ukraine. Investors and analysts expect the reopening to send Russian stocks in free fall.
In recent days, global markets seemed to have turned a corner despite concerns about rising inflation and the war in Ukraine. The S&P 500 rose above its 200-day moving average on Tuesday after falling below it on February 17. The benchmark index has risen 1% or more in five of the last six sessions, bringing it up to 8.1% in that period and has erased all of the losses since Russia invaded Ukraine.
Major indices in Europe and Asia have seen similar movements.
The latest rally has come as Russia’s attacks on Ukraine intensify, Western countries continue to pile up on sanctions and price pressure shows no signs of abating. On Wednesday, fresh inflation data showed that UK consumer prices rose 6.2% in February from a year earlier, up from 5.5% in January, the highest rate since March 1992.
In European markets, Stoxx Europe 600 lost 1.1%, erasing previous increases as oil prices rose sharply. London’s FTSE 100 fell 0.1 per cent. European oil giants Shell and BP each rose 3.3% or more.
The consequences of severe economic sanctions against Russia are already being felt across the globe. WSJ’s Greg Ip joins other experts to explain the significance of what has happened so far and how the conflict could change the global economy. Photo illustration: Alexander Hotz
During the dinner trade in New York, the shares of the energy companies also rose higher. Occidental Petroleum,
Exxon Mobil and Chevron each rose about 1% to 2%.
Meanwhile, shares in meme stocks – which have largely fallen this year – enjoyed a resurgence. Shares in GameStop rose 11% after the company’s chairman of the board, Ryan Cohen, revealed that his company bought 100,000 shares of the company’s shares on Tuesday. Shares in AMC Entertainment Holdings,
which tends to move relative to GameStop, increased 4.9%.
Shares in Adobe fell 8.1%. The software company reported higher profits and better-than-expected revenue growth on Tuesday, but said it expects a hit to the annual revenue from the war in Ukraine.
Traders worked on the floor of the New York Stock Exchange on Tuesday.
Photo:
BRENDAN MCDERMID / REUTERS
In the European bond markets, interest rates on the benchmark 10-year German bottom traded around 0.497% after peaking 0.5% this week. The last time it was about that level was the fall of 2018.
Other signs emerged Wednesday that investors were looking at assets they perceive as safer. The ICE US Dollar Index, which follows the currency against a basket of others, rose 0.2% in recent trading. Gold prices rose 0.4 per cent.
In Asia, the major indices ended higher. Hong Kong’s Hang Seng rose 1.2%, while Japan’s Nikkei 225 rose 3%. China’s Shanghai Composite rose 0.3 pct.
—Georgi Kantchev contributed to this article.
Write to Caitlin McCabe at [email protected] and Scott Patterson at [email protected]
Copyright © 2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8