Stocks weigh on historic US ban on Russian energy, oil nears $130 a barrel

Topline

Shares opened slightly lower on Tuesday – adding to this week’s losses after the market’s worst day since 2020 – as investors remain concerned that soaring energy prices could lead to slower economic growth American, the Biden administration preparing a new ban on imports of Russian oil.

Highlights

The Dow Jones Industrial Average fell 0.3%, about 100 points, while the S&P 500 lost 0.5% and the tech-heavy Nasdaq Composite 0.7%.

Tuesday’s moves follow a sharp selloff on Wall Street a day earlier, in which the S&P 500 plunged nearly 3% – its biggest drop since 2020 – the Dow Jones fell 800 points and the Nasdaq rose. lost 3.6%, placing the index in bearish territory. .

Soaring commodity prices – including everything oil, natural gas and precious metals – have surged in recent weeks due to the ongoing conflict between Russia and Ukraine, with experts now worrying that this could lead to a slowdown in global economic growth.

In US markets in particular, investors have become increasingly risk-averse, turning to safe-haven assets like gold, fearing soaring energy prices will exacerbate already high levels of inflation. , which remain at their highest level for 40 years.

Oil prices continued to soar on Tuesday as the Biden administration prepares to announce a ban on Russian oil imports in response to the country’s actions in Ukraine: US benchmark West Texas Intermediate now sits at $127 a day. barrel, while global benchmark Brent crude is trading at around $131 a barrel.

Russia, for its part, has warned that oil prices could soar to around $300 a barrel if the West proceeds to ban its energy exports: “A rejection of Russian oil would have catastrophic consequences for the global market,” the Deputy Prime Minister said. Alexander Novak said on Monday.

Crucial quote:

“The surge in commodity prices continues to add to concerns that the outlook for economic growth will be hit hard as uncertainty in Ukraine persists,” said Edward Moya, senior market analyst at Oanda. “It appears that the fundamental change due to Russia’s invasion of Ukraine is that inflationary pressures will remain elevated for much longer than expected and that ultimately the economy will fall into recession at some point in time. over the next 24 months.”

To monitor :

President Joe Biden is expected to officially announce a new ban on Russian imports of coal, natural gas and oil later Tuesday morning. While Russia only accounted for 3% of US oil imports last year, it also accounted for 21% of US gasoline imports in 2021. With commodity prices even higher on the news, US gas prices hit a new all-time high of more than $4.17 a gallon on Tuesday, according to AAA data.

Further reading:

Dow drops 800 points with no end in sight for Russian invasion of Ukraine (Forbes)

Dow Posts Fourth Week of Losses, Oil Approaches $120 a Barrel as Russian Invasion of Ukraine Continues (Forbes)

War stocks rise as Russian-Ukrainian conflict rages: Lockheed Martin, Northrop up 20% (Forbes)

Wheat Prices Rise Amid Russia’s Invasion of Ukraine – Here’s What That Means for U.S. Food Costs (Forbes)

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