Oil keeps going up because of talk about a Russian embargo. Stocks also go up because of this.
It’s in Hong Kong, and the AFP says that. Oil prices continued to rise on supply worries as European leaders debated whether to ban imports from Russia. Even though the Wall Street lead was weak and the prospect of a sharper rise in US interest rates loomed, equities held their ground.
Both main crude contracts rose more than 7% on Monday as EU countries talked about following Washington and putting an embargo on Russian energy imports for its war in Ukraine, which has caused prices to rise.
Some members want to add more sanctions against Vladimir Putin because of his actions in Ukraine. Others, like Germany, which still relies on Moscow’s fuel, aren’t so sure.
There was a warning from Saudi Arabia that Yemeni rebel attacks on its oil facilities are a “direct threat” to global supplies after Red Sea facilities belonging to oil giant Saudi Aramco were hit. This added to the pressure on oil prices.
Prices for oil have gone up a lot recently, which has caused a lot of chaos on the world market as people buy more and more as the economy improves.
Because of the war, the cost of metals and wheat have gone up, which has caused inflation to go through the roof. This has made it hard for central banks, who are already having a hard time winding down monetary policy from the pandemic era.
It looks like energy traders are getting more confident that there will be shortages soon, said OANDA’s Ed Moya.
“China’s decision not to impose broad lockdowns is also good for the price of oil because the short-term drop in demand for crude should be short-lived, which should help. The oil rollercoaster ride is still a trade in geopolitics, and right now it looks like there are more risks. This could push the price of crude oil up.”
Stagflation is becoming more and more common in the world’s economy. Prices rise while growth slows down.
Fed chair Jerome Powell said Monday that the bank could raise interest rates more quickly to keep inflation in check, less than a week after the bank said there will be a lot of rate rises this year.
The head of SPI Asset Management’s Stephen Innes thinks that the Fed might raise interest rates by 50 basis points in both May and June because policymakers know that it will be hard to keep inflation down without having more people out of work.
“So, as long as multiple 50 point increases are still on the “to do” list, stock markets could be on edge again.”
People also knew that rates were going to rise faster than they thought they would, which “could eventually lead to a taper tantrum that might happen along with stagflation,” said Moya.
There is still a lot of room for growth in the economy with monetary policy, but that could change quickly if the Fed raises interest rates a lot by the summer.
Still, even though Wall Street ended down, equities in Asia were still strong.
After last week’s huge rise, Hong Kong was back on the rise. Chinese authorities said they would keep supporting markets and the economy, even though it was slowing down.
The yen fell to a new six-year low against the dollar when Tokyo came back from a long weekend. This helps exporters, who make money when the yen is weak against the dollar.
In addition to Shanghai, Seoul, Manila, Jakarta, and Wellington, other cities rose, but Singapore and Taipei didn’t fare so well.
People in Shanghai and Hong Kong lost money after one of China Eastern Airlines’ planes crashed in China, killing 132 people and dropping more than 20,000 feet in just a minute.
