Wall Street ends another bumpy day lower and crude oil prices ease

The economic fallout from the Russian invasion expanded as Fitch Ratings and Moody’s Ratings cut Russia’s credit rating. The agencies said the invasion and Western sanctions have hurt Moscow’s ability to repay debts and raised risks for the economy and stability.

The London Stock Exchange said it had suspended trading in shares of 27 companies with links to Russia, including some of the biggest in energy and steel, such as Lukoil, Gazprom, Sberbank, Rosneft and Magnitogorsk Iron & Steel Works. Those shares lost most of their value prior to the suspension. Rosneft shares dropped from $US7.91 on February 16 to 60 US cents on March 2, while Sberbank shares plunged from $US14.90 to 5 US cents in that same time frame.


Trading on the Moscow exchange remained closed on Thursday. Russia’s ruble lost another 15 per cent against the US dollar and is worth less than 1 US cent. It has plunged since Western governments imposed sanctions that cut off much of Russia’s access to the global financial system.

The exposure and overlap that US markets have to Russia is relatively low. The real risk is the exposure that European banks have to Russia, Young said.

“If European banks start to feel the contagion of that, then it’s about what’s our exposure to Europe, which surprisingly is still reasonably low,” she said. “That doesn’t mean there’s not sentiment risk. Nobody likes to hear about financial markets freezing up.”

Russia’s invasion of Ukraine has been the dominant issue for investors all week as they try to assess its global economic impact. Russia is a key oil producer and prices have been rising as global supplies remain threatened by the conflict, raising concerns that persistent inflation could become even hotter.

Leaders of OPEC and other major oil-producing countries are sticking with plans to gradually increase oil production. Meanwhile, the US and other major governments in the International Energy Agency plan to release 60 million barrels from strategic reserves to boost supplies.

The price of US benchmark crude oil fell 2.6 per cent to $US107.67 a barrel and Brent crude, the international standard, fell 2.2 per cent to $US110.46. Both are still up more than 17 per cent for the week.

Rising inflation and the Fed’s reaction is still a big focus for investors with the impact of the conflict uncertain.

Investors will get another update on the US jobs market on Friday when the Labor Department releases its report for February.

“What we’re poised for is to really look hard at the jobs report tomorrow to see what the Fed needs to do and the state of the economy,” said Rob Haworth, senior investment strategist at US Bank Wealth Management. “Tomorrow’s average hourly earnings will provide a good read on inflation and whether consumers are able to keep up.”


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