Concerns about growth sent S&P 500 stock futures down 1.75%, while those on the Nasdaq fell 1.7%. The 10-year US bond yield also hit its lowest level since early January. The benchmark European STOXX 600 index hit its lowest level in a year but then managed, in tune with the market, to moderate declines.
raw materials on the rise
The invasion of Ukraine by Russia and the multiplication of economic sanctions against Moscow led the prices of gas and metals such as aluminum, copper and palladium to reach new historical highs on Monday.
After soaring 18% at the beginning of the day, Brent managed to moderate the initial rise to start trading at US$125, while US crude oil (WTI) improves to US$123. This jump, which follows a 21% rise in Brent last week, will be costly for consumers and leave them with less money to spend on other things, posing a threat to global economic growth.
The United States and the European Union are “very actively discussing” the possibility of banning Russian oil imports in response to the invasion of Ukraine, US diplomat Antony Blinken said on Sunday. However, the president of the European Commission, Ursula von der Leyen, was more cautious and avoided mentioning the import ban on Sunday, given that Russia supplies 40% of the gas consumed in the EU.
The fear of seeing even more limited the supply of hydrocarbons and raw materials in an already overheated market has caused a “panic phenomenon (which) has caused prices to skyrocket,” Markets.com analyst Neil Wilson summed up on Monday.
The benchmark European gas price, the Dutch TTF, soared to a new record of €345 per megawatt hour (MWh). By 09:05 GMT, he was up 45% at 280 euros. In line with energy prices, those of metals produced in Russia rose, with aluminum breaking the $4,000 a ton barrier for the first time, while copper and palladium hit new all-time highs: u $10,845 per ton and US$3,442.47 per ounce, respectively. The tonne of aluminum for delivery in three months also hit a high of $4,073.50 on the London Metal Exchange (LME).
For its part, nickel, without reaching its latest highs dating back to 2007, rose more than 25% to US $ 37,800 per ton. The situation in Ukraine also caused gold, a haven asset, to soar above $2,000 an ounce on Monday morning, hitting its highest level since September 2020.
At a strategic level, Bank of America stressed that the war threatens a price crisis and a “global recession” caused by “Crash in Financial Markets, Rising Oil Prices, and a Cycle of Escalating Military Sanctions”.
In his opinion, as long as there are no signs of an end to the war, “investors should be as defensive as possible” because “the war is inflationary.” Good proof of this is that the prices of raw materials have registered their most bullish start to the year since 1915.
In addition, they indicate that “war is also stagflationary” and they give as an example the Yom Kippur war and the oil crisis of 73, which caused a 40% collapse in the S&P 500 from its maximum.
Source: Ambito
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