Oil has surpassed the $ 100 threshold, and Asian stocks sold out on Wednesday after Russia stepped up attacks on Ukraine’s largest cities and adopted more aggressive tactics.
Brent crude, the international benchmark, rose 4.4 percent to a seven-year high of $ 109.59 a barrel at the start of Asian trade, while the US marker West Texas Intermediate rose 4.7 percent to $ 108.29.
The latest oil gains, which have left Brent nearly 16 percent higher since Russian President Vladimir Putin launched the invasion, came as Russia stepped up its bombing of Ukraine’s largest cities.
Sanctions imposed on Russia by Western countries seek to avoid the energy sector, but nevertheless fuel instability in global markets due to fears of supply disruptions. But US energy group ExxonMobil said on Tuesday it would leave Russian oil and gas operations, marking the latest corporate exit in response to the invasion.
Joe Biden has also come under increasing pressure to ban Russian oil imports, with Republicans and Democrats calling on the US president to sever energy ties with the Kremlin. In a speech on the state of the Union on Tuesday, Biden voiced support for sanctions against Russia, but stressed that price control was his “highest priority”.
“The Russia-Ukraine conflict is likely to continue to dominate markets for the foreseeable future,” said Robert Carnell, head of Asia-Pacific research at ING. “Yesterday’s announcement that Russia will not pay coupons to foreign holders on its national debt should push investors even further to safe havens.
In Asian markets, the stock sold off, driven by a 1.7% drop for the Japanese benchmark Topix. China’s CSI 300 index of shares registered in Shanghai and Shenzhen fell 1%, while Hong Kong’s Hang Seng index fell 0.6%.
The decline followed a sharp decline on Wall Street, where both the S&P 500 and the technology-focused Nasdaq Composite fell 1.6%. Futures hit the S&P 500 up 0.1 percent on Wednesday, while the Euro Stoxx 50 was set to fall 0.1 percent after ending a 2.4 percent down on Tuesday.
In government bond markets, the yield on US bonds stabilized after a rally on Tuesday as investors sought refuge to mitigate the fall in stock prices. Yields on 10-year US government securities rose 0.03 percentage points to 1.7565 after falling nearly 0.1 percentage points in the previous session.
In foreign currencies, the ruble has stabilized at around 108 against the dollar after a criminal crash this week, leaving it almost 30% lower since the invasion began.
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Client hands over banknotes and coins in Russian rubles to a seller at a market in Omsk, Russia, February 18, 2022. REUTERS / Alexey Malgavko
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NEW YORK, March 1 – Roll weakened by more than $ 100 against trade in Moscow and hit a record low of 117 in other markets on Tuesday, threatening the living standards of ordinary Russians as the country is hit by harsh Western sanctions after its invasion of Ukraine.
The currency found some support after Russian authorities ordered exporting companies, including some of the world’s largest energy producers from Gazprom to Rosneft, to sell 80% of their foreign exchange earnings to the market because of the central bank’s own ability. to intervene in foreign exchange markets were limited.
Later in the day, Russian President Vladimir Putin issued a decree banning the export of cash in foreign currency in excess of $ 10,000 worth as of March 2, according to a Kremlin statement.
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But even a sharp fall of the session below $ 90 per dollar left the ruble well below the $ 75 it traded before Russia recognized two breakaway regions in eastern Ukraine and sent troops to its neighboring country last week.
The roll ended lower by 6.5% to 101.23 against the dollar in trade in Moscow and lost 5.8% to 112.49 against the euro.
After the closure of Moscow, the ruble weakened to as much as 117 per dollar and traded close to 105 in late trading in New York.
“By nature, this is a sign of breaking the link between what is happening in Russia and what is happening abroad,” said Rachel Ziemba, founder of Ziemba Insights in New York.
“After all, many foreign actors can’t actually be involved in buying Russian assets right now.”
Large Russian banks have been excluded from the international payment system SWIFT.
The ruble has fallen since the beginning of the Russian invasion of Ukraine, at one point losing a third of its value in trade in Moscow, prompting the central bank to more than double interest rates to 20% and take a number of other emergency measures. Read more
Moscow called its actions in Ukraine a “special operation” it said was not intended to occupy territory but to destroy the military capabilities of its southern neighbor and capture dangerous nationalists.
SHARES ABROAD FALL
Trading in shares on the Moscow Stock Exchange was suspended for a second day after sharp sell-offs hit the market in mid-February.
Russia said on Tuesday it was imposing temporary restrictions on foreigners wishing to exit Russian assets and ordered it to spend up to $ 10 billion from its black-day fund to buy shares in Russian companies. Read more
But the ETF on Russian stocks traded in the United States fell 24% on Tuesday to a combined 47% drop in two days and set a record low to close while London-based iShares MSCI Russia ETF (CSRU.L) lost a third. of its value on Tuesday and decreased by 83% since mid-February.
“The price is the great arbiter, and the price falling the way it is tells you that at least right now the market is a little skeptical about this demand,” said Samir Samana, senior global market strategist at Wells Fargo Investment Institute.
“If this kind of statement or demonstration of force were credible, they obviously wouldn’t fall so fast.
The depository receipts of the dominant state lender Sberbank in London fell 80% on Tuesday.
VIOLATED ANIMAL STANDARD
A weak ruble will lower Russia’s standard of living and inflate already high inflation, while Western sanctions are expected to lead to a shortage of basic necessities that people in Russia are used to, such as cars.
The Institute of International Finance (IIF), a trading group representing major banks, has warned that Russia is also likely to fail to pay off its foreign debts and that its economy will double-digit this year.
Russia’s central bank and finance ministry have not responded to a Reuters request for comment on the possibility of default.
Inflation will jump in the short term, but may slow in the long term as people in Russia switch to a money-saving regime, said Dmitry Polevoy, head of investment at Locko-Invest.
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