por admin » Mié Mar 02, 2022 10:50 am
Oil Tops $110, Stocks Move Higher as Investors Eye Ukraine
Crude prices surge as Russia struggles to maintain energy sales
By Joe Wallace and Caitlin McCabe
Updated March 2, 2022 10:25 am ET
U.S. stocks rose, while oil prices jumped, as investors watched for updates from Ukraine and parsed testimony on the Federal Reserve’s plans to raise interest rates.
The S&P 500 added 0.7% in morning trading Wednesday, a day after the benchmark index fell 1.6%. The Dow Jones Industrial Average rose 0.7% and the technology-focused Nasdaq Composite Index ticked up 0.8%.
Stocks have been volatile in recent days as the war waged by Russia in Ukraine has escalated. Investors are responding to fast-moving developments on the battlefield, a volley of Western sanctions on Moscow and major companies cutting ties with Russia. By boosting energy prices, the conflict has added to uncertainty regarding likely path of U.S. interest-rates this year.
So far, major U.S. indexes have been relatively resilient, with both the S&P 500 and Nasdaq Composite up 1.9% or more since the Russian invasion. However, soaring oil prices threaten to unleash more volatility across markets.
Energy markets extended their rapid advance Wednesday. Crude prices surged over $110 a barrel for the first time since 2014 as refiners refused to buy Russian oil, taking a bite out of global energy supplies. Brent-crude futures, the international benchmark, rose 5.2% to $110.54 a barrel, extending their advance this year.
“The knock-on effects [across markets] are heavily dependent on how high oil prices get,” said Craig Erlam, senior market analyst at Oanda. “If oil prices start to head to $120, we’re going to start seeing a lot more talk about the economic consequences globally of these sanctions.”
Shares of energy companies jumped, with BP PLC gaining 4% and TotalEnergies rising 6% in European trading. In the opening minutes of trading in New York, Exxon Mobil, Diamondback Energy and Halliburton each added 1.2% or more.
Energy companies stand to benefit from higher energy prices, even as they work to disentangle themselves from Russia. Exxon said this week it was halting operations at a multibillion-dollar oil and gas project in Russia and would make no further investments in the country. BP said Sunday it would exit its nearly 20% stake in Russian government-controlled oil producer Rosneft.
Among other sectors in New York, Nordstrom shares jumped 30% after the retailer projected stronger-than-expected earnings this year. Hewlett Packard Enterprise raised its earnings forecast for the year, lifting shares 6.6%.
Long Lines at ATMs in Russia as Ruble Collapses
Long Lines at ATMs in Russia as Ruble Collapses
Long Lines at ATMs in Russia as Ruble Collapses
Russians are lining up to use ATMs as ordinary citizens begin to feel the impact of Western allies’ sanctions on the country following Moscow’s invasion of Ukraine. Photo: AP Photo/Dmitri Lovetsky
In Europe, the pan-continental Stoxx Europe 600 edged 0.35% higher. In Russia, stocks and derivatives trading was closed for a third day this week. The Russian ruble fell 0.7% against the greenback to trade at 110.27 per U.S. dollar, versus 83 Friday.
Prices leapt in other pockets of the energy market tied to Russia. European natural-gas prices jumped 37%. So far there has been minimal disruption to the pipeline system in Ukraine, through which about a third of Russian gas exports to Europe flow, according to analysts.
The Organization of the Petroleum Exporting Countries and its Russia-led allies agreed Wednesday to raise their collective production by another 400,000 barrels a day in April, in line with what was agreed to last year. This came after the U.S. and other major oil-consuming nations said they would release 60 million barrels of oil from their emergency stockpiles. The International Energy Agency said it wanted to send “a unified and strong message to global oil markets that there will be no shortfall in supplies as a result of Russia’s invasion of Ukraine.”
Traders have dialed back expectations for the number of Federal Reserve interest-rate rises this year.
Photo: Michael Nagle/Zuma Press
Rising oil prices pose a headache for central banks already dealing with the fastest inflation rates in decades. The Fed’s Mr. Powell began the first of two days of testimony when he appeared before the House Committee on Financial Services Wednesday morning.
Lawmakers are likely to press Mr. Powell on the likely pace of rate increases, the outlook for inflation and potential economic fallout from the Russian invasion. In his prepared remarks, Mr. Powell said it would be appropriate for the Fed to raise its benchmark rate at its meeting in two weeks.
Yields on benchmark 10-year Treasury notes rose to 1.796%, from 1.708% Tuesday. Yields and bond prices move in opposite directions.
In the cryptocurrency market, bitcoin traded at around $43,921, according to CoinDesk, up about 0.1% from its 5 p.m. ET level Tuesday. Russia’s invasion of Ukraine has driven demand for cryptocurrencies in both countries, helping drive up the price of bitcoin.
Stocks in Asia mostly fell. Japan’s Nikkei 225 lost 1.7% and Hong Kong’s Hang Seng Index finished down 1.8%. South Korea’s Kopsi, in contrast, added 0.2%.