Russia oil ban hits stocks, gold soars
Stock markets are lower amid the backdrop of the Ukraine-Russia war. The US and the UK are taking steps to apply pressure on the Russian government, and that is hurting sentiment. In the first half of the session, European stock markets were showing modest gains, but the headlines about energy bans flipped sentiment round. The DAX and the FTSE 100 have slipped into the red, and the fact the markets couldn’t hang on to a gain for a full day underlines the fragile sentiment. On Wall Street, the S&P 500 is little lower too as the Ukraine-Russia situation remains in focus.
A few hours ago, it was reported that President Biden could announce a ban on Russian energy. The headline ramped up the oil market as the embargo would cover, oil, liquified natural gas, as well as coal. Not long after the story hit the news wires, it was revealed the UK are looking to halt oil imports from Russia. Brent crude jumped to a new 14 year high as a reaction to the stories. Now that two influential governments have moved against Russia, it is possible that others will follow.
For a change, the euro is gaining ground as the mood has improved ever so slightly. Out of the major currencies, the euro has suffered the most since the war commenced. Although EUR/GBP, EUR/CHF and EUR/USD are higher today, it is worth remembering the currency pairs have declined aggressively in the past week. It may transpire that today’s moves are merely a short-term bounce.
Gold is moving from strength to strength as the metal traded above $2065 – its highest level since August 2020. Keep in mind the metal only briefly crossed the $2000 mark yesterday, so the rate at which it is rising is accelerating. The yellow metal is benefiting from the overall fears that is still doing the rounds on account of the war, and the slide in the US dollar is playing a role too. We are seeing wild moves in metals due to concerns about supply levels. Platinum, palladium, and silver are all up over 5% as worries about supply levels and spiralling inflation fears are lifting the assets.
