Global stock markets plummeted while US Treasury yields rose sharply on Tuesday as investors weighed on the prospect of rising inflation following the European Union’s gradual ban on Russian oil imports, which has raised crude oil prices to new highs.
EU leaders have largely agreed to cut 90% of Russia’s oil imports, the union’s toughest sanctions to date against Moscow since its invasion of Ukraine in February.
The new sanctions will apply to Russian crude oil, which is delivered by consignment and will be phased for more than six months, with refined goods introduced in eight months.
The trade embargo exempts pipeline oil from Russia as a concession to Hungary.
Oil prices peaked on Tuesday after the EU announcement, with Brent crude rising 0.96% to $ 122.84 a barrel after rising to $ 124.64 a barrel – the highest since March 9.
However, Brent crude oil contracts for August fell 1.7%, or $ 115.60 a barrel, after it was announced that members of the Organization of the Petroleum Exporting Countries (OPEC) were considering terminating a production agreement with Russia.
US West Texas Intermediate (WTI) crude oil also fell 0.06% in trading at $ 115.02 a barrel, reversing previous gains.
“Energy is an input cost for basically everything and high oil prices are bad for inflation,” said Thomas Hayes, chief executive of Great Hill Capital.
The MSCI World Equities Index, which measures equities in 50 countries, fell 0.61%.
The pan-European STOXX 600 index decreased by 0.72%.
US Treasury yields rose and most maturities peaked in one week as inflationary concerns ruled countries in trade after eurozone inflation peaked this month.
Treasury yields also rose, in part driven by hawkish remarks by Governor Christopher Waller on Monday.
Waller said he was in favor of keeping 50-point interest rate hikes on the table until a significant drop in inflation is seen, which reduces expectations that the central bank could pause after rising in June and July.
The 10-year yield rose to 2.8622%.
On Wall Street, all three major indices, driven by healthcare, technology, energy and industry, fell.
The Dow Jones industrial average was down 0.67% to 32,990.12, the S&P 500 was down 0.63% to 4,132.15 and the Nasdaq Composite was down 0.41% to 12,081.39.
The US dollar generally strengthened on Tuesday as Treasury yields rose and concerns about a further acceleration of global inflation eased investor risk appetite.
The dollar, which follows the currency against the six major currencies, rose by 0.345% to 101,770.
The euro fell by 0.41% to 1.0733 dollars.
Sheltered gold fell by 1%, making it the second month in a row to fall, pushing up the dollar and the US Treasury yield, which reduced the attractiveness of the metal despite concerns about rising inflation.
Spot gold fell 1.0% to $ 1,387.30 an ounce.
Futures gold trading in the United States fell 0.99% to $ 1,833.00 an ounce.
World equities fall, US yields rise as oil prices hit new highs – SABC News
Source link World equities fall, US yields rise as oil prices hit new highs – SABC News