Breaking News
Close
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

World shares rise, oil falls 13% on diplomacy, OPEC nation's pledge

Economy Mar 09, 2022 18:40
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: A man looks at stock market monitors in Taipei January 22, 2008. REUTERS/Nicky Loh 2/2

By Elizabeth Dilts Marshall

NEW YORK (Reuters) - Global stock markets rallied in Europe and North America on Wednesday after three straight days of selling, and oil prices retreated from the peaks scaled over the last week after the United Arab Emirates pledged to boost its oil supply.

Moscow accused the United States on Wednesday of declaring an economic war on Russia, and said it was considering a response to the U.S. ban on Russian oil and energy imports.

Russia's economy faces the gravest crisis since the 1991 fall of the Soviet Union after Western nations imposed sanctions on Russian companies, banks, individuals and its central banking system, following its Feb. 24 invasion of Ukraine.

But there were signs that the conflict could cool on Wednesday, as Russian Foreign Minister Sergei Lavrov arrived in Turkey for more diplomatic talks with his Ukrainian counterpart Dmytro Kuleba.

The MSCI world equity index, which tracks shares in 50 countries, was up 2.91% on the day at 3:30 p.m. EST (2030 GMT).

U.S. stocks surged on Wednesday, with the tech-heavy Nasdaq jumping over 3%, rebounding from several days of declines as oil prices pulled back sharply and investors gauged developments in the Ukraine crisis.

The Dow Jones Industrial Average rose 778.14 points, or 2.38%, to 33,410.78, the S&P 500 gained 123.57 points, or 2.96%, to 4,294.27 and the Nasdaq Composite added 493.33 points, or 3.86%, to 13,288.89.

Europe's STOXX 600 gained 4.68%.

In a rocky trading session, the international oil benchmark Brent crude settled 13.16% lower at $111.14. U.S. crude closed down 12.13% at $108.70 per barrel, its biggest one-day percentage decline since November 2021. [O/R]

Oil at one point fell more than 17% after OPEC member UAE said it would support boosting supply into a market in disarray because of supply disruptions and sanctions on Russia.

Joseph Capurso, head of international economics for the Commonwealth Bank of Australia, noted that though Wednesday's market moves appear large, "equities are still well below, and oil prices are still well above, prewar levels." 

"The proximate cause for the big moves are signs Ukraine may accept Russian demands for neutrality in exchange for security guarantees," Capurso said. If the war does de-escalate, he said, investors will refocus their attention on inflation data and central banking moves.  

WIDESPREAD ECONOMIC CONSEQUENCES

The Russian invasion and ensuing sanctions have played havoc with global supply chains, sent prices soaring across commodities markets and could slow economic growth worldwide.

European companies are suffering more strain on supply chains caused by the war, with German carmakers Porsche, Volkswagen (DE:VOWG_p) and BMW all curtailing output because of a lack of supplies.

The London Metal Exchange halted nickel trading on Tuesday after prices rocketed to over $100,000 a tonne on concern that Russian supplies will be interrupted. The LME said it does not expect to resume trading before Friday.

A World Bank official said high oil prices prompted by Russia's invasion could cut a full percentage point off the growth of big developing economies such as China, Indonesia, South Africa and Turkey.

Emerging market stocks lost 0.19%.

"War is inflationary and this war in particular is very inflationary... not just in terms of energy, oil and gas, but it's inflationary across the commodities complex," said Dan Scott, chief investment officer at Vontobel.

"Grain prices don't react to central bank policy, and nor do necessarily nickel prices.... Hiking interest rates is not going to have a direct impact."

After a four-session rally, spot gold fell on Wednesday by 2.4% to $2,003.66 an ounce, as markets became less risk-averse.

The European Central Bank meets on Thursday, but given the threat of stagflation - when prices soar and growth slows - economists expect rate hikes will be put off until later this year.

The euro rose on reports that European Union countries were discussing joint bond issuance to finance energy and defenee spending. The euro up 1.61% to $1.1074, while the dollar index fell 1.18%.

German government bond yields rose as investors awaited the ECB meeting.

The 10-year U.S. Treasury yield was 1.9235%, as U.S. job openings, a measure of labor demand, fell by 185,000 to 11.263 million in January.

Elsewhere, bitcoin surged 9% to $42,260 after U.S. President Joe Biden signed an executive order requiring government agencies to assess the benefits and risks of creating a central bank digital dollar.

World shares rise, oil falls 13% on diplomacy, OPEC nation's pledge
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
DOWNLOAD APPApp store
Investing.com
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
or
Sign up with Email