November 30, 2022

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Stocks tumble, oil and wheat prices rise after Ukraine attack

Stocks tumble, oil and wheat prices rise after Ukraine attack

NEW YORK (Associated Press) – Stocks around the world tumbled Thursday after Russia’s attack on Ukraine, spreading fear in markets and adding to pressure on high inflation already weighing on the global economy.

On Wall Street, the S&P 500 fell 1.6% in early trading to continue its dismal start to the year. The benchmark is that the index is now 13.5% lower than the record level set earlier this year. Stocks in Europe fell further after officials described the Russian moves A “brutal act of war”, with the German DAX down about 5%.

In addition to the human toll, the conflict appears to be sending prices higher at petrol pumps and grocery stores around the world. Russia and Ukraine are major producers not only of energy products but also of grain and various other commodities. War could upset global supplies, as could sanctions imposed by the United States and other allies.

Oil prices on both sides of the Atlantic have jumped around $100 or more a barrel to their highest since 2014, up more than 6%. Wholesale prices also jumped higher for heating oil, wheat and other commodities. And the spot price of natural gas in Europe, for which the continent depends on Russia, jumped by as much as 31%.

Increases in energy and food prices could amplify concerns about inflation, which in January reached its highest levels in the United States in two generations, and what the Federal Reserve will do in turn to curb it. Low interest rates that investors love, which also helped propel financial markets and the economy out of the meltdown caused by the Corona virus. The only question was how fast and how hard the Fed would move.

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Bond yields fell worldwide, a sign that investors were scrambling for anything that might offer safer returns than stocks and other riskier bets. The yield on the 10-year US Treasury fell to 1.89% from 1.97% late Wednesday. Gold was also higher, rising 2.4%, continuing its strong run amid concerns about Russia and Ukraine.

On Wall Street, concerns about rising interest rates have dealt the biggest blows to major tech stocks, a turnaround after those companies jumped to lead Wall Street out of the coronavirus plunge in 2020.

The Nasdaq Composite, which is filled with big tech stocks, is down 1.5% and could close more than 20% below the record set on November 19, 2021. If that happens, it’s something Wall Street calls a “bear market,” something that hasn’t happened to the stock market. Nasdaq since the coronavirus first smashed the global economy.

The Dow Jones Industrial Average fell 647 points, or 2%, to 32,490 points.

ING’s Chris Turner and Francesco Bisol said in a report that financial markets are “on the way to safety and may have to show slower growth” due to higher energy costs.

In Brussels, the head of the European Commission said on Thursday that the 27-nation European Union plans to impose wide-ranging and targeted sanctions against Russia.

“We will hold President Putin to account,” said Ursula von der Leyen.

London’s FTSE 100 fell 3.1% after Europe woke up to news of explosions in the Ukrainian capital, Kiev, the main city of Kharkiv and other regions. The CAC 40 in Paris lost 4%.

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The Moscow Stock Exchange briefly suspended trading in all its markets on Thursday morning. After trading resumed, the ruble-denominated MOEX index fell more than 20% and the dollar-denominated RTS index fell by more than a third.

Some analysts expect the conflict to drive investors out of many technology stocks, with the exception of the cybersecurity sector.

“The growing concern that a massive cyberwar could be on the near-term horizon would certainly spur increased spending around preventing advanced Russia-based cyber attacks,” analysts at Wedbush Securities wrote in a note to clients.

Putin said Russia should protect civilians in eastern Ukraine, a claim Washington predicted he would make to justify the invasion.

President Joe Biden condemned the attack as “unjustified and unjustified” and said Moscow would be held accountable, which many considered Washington and its allies to impose additional sanctions. Putin accused them of ignoring Russia’s demand to prevent Ukraine from joining NATO and to provide Moscow with security guarantees.

Washington, Britain, Japan and the European Union earlier imposed sanctions on Russian banks, officials and business leaders. Additional options include blocking Russia from the global banking system.

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Joe MacDonald, business writer for AP Business contributed.