Stocks rise and oil falls as investors track Ukrainian negotiations

Soaring commodity prices eased the fear of a stagnation in the US economy as stock prices rose on Monday, oil prices fell, and investors waited for the possibility of a rise in interest rates by the Federal Reserve later this week.

The Dow Jones Industrial Average rose nearly 1% and the S & P 500 rose 0.6%. Benchmark stock indexes have fallen in four of the last five weeks. Investors, in addition to the war in Ukraine and the prospect of rising interest rates, pushed into perceived shelters like gold while they were selling stocks.

Investors said positive comments from both Ukrainian and Russian officials on the round of negotiations boosted the market on Monday. The technology-focused Nasdaq Composite Index added 0.4%.

The outbreak of Covid-19 in China disrupted production by a major supplier in Shenzhen, resulting in a 1% drop in Apple’s share.

Falling oil prices could ease concerns that consumer spending will slow at record highs, but the outbreak of Covid-19 in China, one of the causes of the fall in oil, is latent. It may renew concerns about the disruption of the traditional supply chain and its subsequent implications. US economy. All shortages, from computer chips to chocolate, have hindered growth for months as variants of Omicron scrambled business plans and raised the cost of large and small businesses.

“China’s closure and potential supply chain issues, people are afraid of it,” says Joe Saluzzi, co-head of equity trading at Themis Trading. “”

He said potential economic sacrifices could tamper with expectations of the Federal Reserve raising interest rates later this year. Investors are paying attention to the Fed’s monetary policy meeting, which concludes Wednesday. Interest rates have risen for the first time since 2018 as authorities are trying to cool demand and curb inflation. It has overcome the very complex environment of tight labor markets, supply turmoil, and more recently the war in Ukraine.

China’s Shanghai Composite Index fell 2.6% after Shenzhen was blocked to contain the coronavirus. In Europe, the Stocks Europe 600 rose 0.9%, driven by the share of automakers and banks.

The blockade could cause oil demand to plummet, with international benchmark Brent crude oil futures down 5.6% to $ 103.19 a barrel. market.

Yields on 10-year government bonds rose from 2.004% on Friday to 2.09% on Monday. Yields move in the opposite direction of bond prices, the highest since July 2019.

The benchmark S & P 500 index has fallen in four of the last five weeks.


Spencer Pratt / Getty Images

Elsewhere in the commodity market, nickel trading remained suspended on the London Metal Exchange. The London Metal Exchange closed the market last week to curb a sharp rise in prices.

Edward Park, Chief Investment Officer at Brooks McDonald, said:

“If negotiations are suspended or appear to be heading in the wrong direction, there is certainly a risk of short-term volatility attacks,” he added.

Despite expectations for negotiations, conflicts are intensifying and there is growing concern among officials and investors that the war could flow out of Ukraine. Russian airstrikes at the Ukrainian military training center near the Polish border killed 35 people on Sunday. Russia asked US officials say China is supporting military equipment and other war effort.

Currently, commodity prices are skyrocketing, but the prices that investors pay in the open market for commodities such as coffee, copper, and corn have little to do with the prices that customers pay in stores. WSJ’s Dion Rabouin explains. Illustration: Adele Morgan

Write to Joe Wallace at joe.wallace@wsj.com

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