Oil prices top $100 a barrel as Russia’s war on Ukraine rages on

Oil prices soared and investors shifted more money into ultra-safe US government bonds as Russia escalated its war on Ukraine.

The price of oil jumped above $100 a barrel after Russia, a major energy producer, faced further isolation and economic damage due to its invasion of Ukraine.

The bond rush took the yield on 10-year Treasury bills down to 1.77%, where it stood at the start of February.

Stock prices were mixed early on on Wall Street.

On Wall Street, S&P 500 and Dow Jones futures fell 0.7%. Major European indices fell sharply, while Asian stocks were mostly up. Oil prices continue to soar and US benchmark crude broke above $100 for the first time since the summer of 2014.

European markets were down.

A 40-mile (64 kilometer) Russian tank convoy threatened the Ukrainian capital Kyiv on the sixth day of the war as the Kremlin grew increasingly isolated.

Russia is a major energy producer and soaring oil prices and mounting financial pressure from the United States and its allies on Russia for its invasion of Ukraine have added uncertainty to the global economic outlook. .

“While ceasefire talks on the Belarusian-Ukrainian border have come to an end, military fire has certainly not ended, alongside the lifting of sanctions,” Tan Boon Heng said. from Mizuho Bank in Singapore in a comment.

The French CAC 40 lost 3%, while the German DAX lost 2.7%. Britain’s FTSE 100 fell 1.3%.

Japan’s benchmark Nikkei 225 gained 1.2% to end at 26,844.72. Australia’s S&P/ASX 200 jumped 0.7% to 7,096.50. Hong Kong’s Hang Seng added 0.2% to 22,761.71, while the Shanghai Composite rose nearly 0.8% to 3,488.83. Markets were closed in South Korea for a holiday.

“The market will continue to focus on geopolitical tensions, at least in the short term,” ActivTrades’ Anderson Alves said in a report.

The value of the Russian ruble fell to a record high on Monday after Western countries moved to block some Russian banks from a key global payment system. Also on Monday, the US Treasury Department announced new sanctions against the Russian central bank.

The ruble traded at 97 to the US dollar on Tuesday, up more than 10% from its nadir of 108.02 to the dollar a day earlier. Russian markets, after closing early on Monday, remained closed on Tuesday.

Governors and lawmakers in many U.S. states, seeking to aggravate financial pressure on Russia, were taking steps to withdraw state pension and treasury funds from investments in Russian-owned entities or Russian-supporting companies. the war.

Various companies have announced plans to downsize or withdraw from business in Russia, or suspend operations in Ukraine due to the conflict.

Investors were already nervous before the invasion of Russia in anticipation of Federal Reserve plans to raise interest rates for the first time since 2018 to counter inflation.

The Fed is on a tightrope, needing to raise rates enough to rein in inflation, but not enough to suffocate the economy into a recession. Higher rates also put downward pressure on various investments, from stocks to cryptocurrencies.

The war in Ukraine is raising expectations that the Fed and other central banks may need to take a softer-than-expected approach to raising interest rates.

Seeking safer returns, investors invested in US government bonds. The 10-year Treasury yield fell 0.15 percentage points on Monday to 1.83%, its biggest drop since the omicron variant of the coronavirus first rattled investors.

The 10-year Treasury note was at 1.73% early Tuesday.

Fed Chairman Jerome Powell is due to testify before Congress later this week and could offer some clues on the way forward. A report on Friday will also show whether US labor market strength continued in February, giving the Fed more room to raise rates.

In energy trading, benchmark U.S. crude added $4.69 to $100.21 a barrel in electronic trading on the New York Mercantile Exchange. It jumped from $4.13 to $95.72 on Monday.

Brent crude, the international standard, rose $5.17 to $103.04 a barrel. Oil prices on both sides of the Atlantic have risen amid concerns about what will happen to crude supplies.

In currency trading, the US dollar fell to 114.76 Japanese yen from 114.99 yen. The euro slipped to $1.1174 from $1.1219.

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