Stock markets recover ground and raw materials soar due to the war in Ukraine

Wall Street and European stocks rallied on Wednesday as oil, gas and aluminum prices soared due to the war in Ukraine.

The New York stock market rose, encouraged in particular by the tone considered moderate in a speech by the president of the Federal Reserve (Fed), Jerome Powell, and the announcement of new talks between Russia and Ukraine. The Dow Jones thus gained 1.79% at the close, while the technological Nasdaq rose 1.62% and the S&P 500 index 1.86%.

Powell indicated in a presentation to Congress that he will propose a quarter percentage point hike in benchmark rates at the next meeting of the body’s monetary committee in mid-March.

In any case, it does not exclude a stronger rise if necessary in future meetings. “I think it will be appropriate to increase our target range … at the March meeting in two weeks. And I am prone to proposing a 25 basis point rate hike,” he declared.

But if inflation were higher, “we would be willing to act more aggressively by raising rates by more than 25 basis points at a meeting or meetings” later in the year, he said.

Powell also referred to the impact of the conflict in Ukraine on the US economy, which he considers “very uncertain.”

“There is a perception of progress between Russia and Ukraine,” commented analyst Jack Ablin of Cresset Capital, despite the continuing fighting. To illustrate this impression of investors, the analyst mentioned the drop in stocks from the defense and weapons sector, such as Lockheed Martin (-1.45%) or Raytheon (-1.94%), which had risen in the last days.

In Europe, the main squares closed earlier in green. Madrid ended up adding 1.82%; Paris, 1.59%, London, 1.49% and Frankfurt, 0.69%. Milan also ended the session positive (+0.70%). European markets failed to recover their levels from earlier in the week, much less those before Russia launched the invasion of Ukraine last Thursday.

In Asia, on the other hand, the Tokyo stock market closed with losses of 1.68% for its main index, the Nikkei 225. Hong Kong fell 1.84% and Shanghai 0.13%, all punished by Tuesday’s fall on Wall Street. .

raw materials on the rise

The prices of raw materials continued to rise, in a context of uncertainty due to world supply.

The barrel of Brent crude from the North Sea for delivery in May jumped 7.58% to US$112.93 in London, its highest since 2014. Meanwhile, in New York, the barrel of West Texas Intermediate (WTI) for April delivery climbed 6.95% to $110.60, a peak not seen since 2011.

Black gold soared again after the decision of the exporting countries of Opec + (OPEC and allies), led by Saudi Arabia and Russia, not to increase their production more than expected, despite the rise in prices, which is fueling a rampant inflation in many countries.

The thirteen members of the Organization of Petroleum Exporting Countries (OPEC) and its ten partners agreed to “adjust their total production level upwards by 400,000 barrels per day for the month of April 2022,” the cartel announced in a statement at the end. of a brief meeting without surprises.

The conflict in Eastern Europe comes at a time of market tension, as the global recovery from the covid pandemic increased demand.

Nickel and aluminum record

The European benchmark price for natural gas, the Dutch TTF, hit a record €194.715 per megawatt hour (MWh) equivalent, before settling at €168.77.

Aluminum and nickel, metals that rely heavily on Russian exports, rose sharply to record highs.

Aluminum hit $3,597 a tonne on the London Metals Market (LME), an all-time high, while nickel neared an 11-year high, trading at $26,505 a tonne.

In 2021, Russia was the world’s third-largest aluminum producer, behind China and India, according to the World Bureau of Metal Statistics, exporting much of its production to Turkey, Japan, China, the United States and the EU.

coins

The euro, meanwhile, remained in balance at 1.1125 per dollar. The Russian ruble gained 5.94%, although it lost almost a third of its value against the greenback in a month.

Bitcoin meanwhile paused after two days of strong gains and was flat (+0.04% to $43,918).

AFP