A gallon of regular already costs an average of $US4.065 across the gallon after breaching the $US4 barrier on Sunday for the first time since 2008. A month ago, a gallon averaged $US3.441, according to AAA.
A barrel of US crude oil was trading at $US117.85 per barrel, up 1.8 per cent, after earlier touching $US130.50. Brent crude, the international standard, was up 3.6 per cent at $US122.34 per barrel after earlier topping $US139.
Markets worldwide have swung wildly recently on worries about how high prices for oil, wheat and other commodities produced in the region will go because of Russia’s invasion, inflaming the world’s already high inflation. In the United States, prices for consumers jumped last month from their year-ago level at the fastest rate in four decades.
The conflict in Ukraine also threatens the food supply in some regions, including Europe, Africa and Asia, which rely on the vast, fertile farmlands of the Black Sea region, known as the “breadbasket of the world.”
The war puts extra pressure on central banks around the world, with the Federal Reserve on course to raise interest rates later this month for the first time since 2018. Higher rates slow the economy, which hopefully will help rein in high inflation. But if the Fed raises rates too high, it risks forcing the economy into a recession.
Some investors have seen the war in Ukraine as potentially pushing the Fed to go easier on rate increases. Investors love low rates because they tend to boost prices for stocks and all kinds of markets.
But that may not necessarily be the case this time, Goldman Sachs economists wrote in a report. With prices for oil, wheat and other commodities potentially rising even more, the threat is higher for a sustained, high inflation to settle on the economy. That could flip the Fed’s traditional playbook.
“After several decades in which economic, financial, or political shocks invariably caused interest rates to fall, markets may have to re-learn that the opposite can also be true,” Goldman Sachs economist Jan Hatzius wrote.
Beyond sanctions brought on Russia by governments because of its invasion of Ukraine, companies are also levying their own punishments. The list of companies exiting Russia has grown to include Mastercard, Visa and American Express, as well as Netflix.
The value of the Russian rouble continued to slide amid all the financial pressure, falling another nearly 20 per cent. It dropped below 0.7 cents.
“The Ukraine-Russia conflict will continue to dominate market sentiments and no signs of conflict resolution thus far may likely put a cap on risk sentiments into the new week,” said Yeap Jun Rong, market strategist at IG in Singapore.
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“It should be clear by now that economic sanctions will not deter any aggression from the Russians, but will serve more as a punitive measure at the expense of implication on global economic growth. Elevated oil prices may pose a threat to firms’ margins and consumer spending outlook,” Yeap said.
On Wall Street, shares of Bed Bath & Beyond soared after the investment firm of billionaire Ryan Cohen took a nearly 10 per cent stake in the company and recommended big changes. Cohen is the co-founder of Chewy, and he’s amassed somewhat of a cult following after he took a stake in GameStop, the struggling video game chain that eventually named him board chairman.
Shares of Bed Bath & Beyond jumped 31.1 per cent to $US21.18.
Treasury yields climbed, with the 10-year rising to 1.74 per cent from 1.72 per cent late Friday.
AP
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Oil surge rattles Wall Street; ASX set to edge higher
Source: Philippines Alive
