Worries over Ukraine Invasion Pummel US Stocks, Lift Oil Prices

File: Both the Dow and S&P finished at new peaks on Friday and also posted their fourth consecutive weekly gains. AFP/Angela Weiss
File: Both the Dow and S&P finished at new peaks on Friday and also posted their fourth consecutive weekly gains. AFP/Angela Weiss
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Worries over Ukraine Invasion Pummel US Stocks, Lift Oil Prices

File: Both the Dow and S&P finished at new peaks on Friday and also posted their fourth consecutive weekly gains. AFP/Angela Weiss
File: Both the Dow and S&P finished at new peaks on Friday and also posted their fourth consecutive weekly gains. AFP/Angela Weiss

Wall Street stocks tumbled and oil prices surged Friday as White House warnings of a possibly imminent Russian invasion of Ukraine reverberated through financial markets.

Markets lurched during a briefing by US National Security Advisor Jake Sullivan, who said a Russian invasion could "begin at any time," including during the Beijing Winter Olympics, AFP said.

"If a Russian attack on Ukraine proceeds, it is likely to begin with aerial bombing and missile attacks that could obviously kill civilians," Sullivan said. "Any American in Ukraine should leave as soon as possible, and in any event in the next 24 to 48 hours."

Investors had become less worried about an imminent invasion of Ukraine in recent days following Western diplomacy with Russian President Vladimir Putin.

But stocks tumbled after Sullivan's remarks, with the S&P 500 ultimately losing 1.9 percent.

Analysts said the sell-off was likely heightened by the timing just before the weekend, with investors shifting into a "risk-off" mode to reduce their exposure for the two days when there is no trading.

"The Russia-Ukraine tensions have hovered over already shaky investor sentiment," said John Lynch, chief investment officer for Comerica Wealth Management. "Investors have been counting on a diplomatic resolution, but recent developments indicate this may be wishful thinking and therefore, not fully priced into the markets."

Most industrial sectors finished lower on Wall Street following the midday White House announcement.

An exception was energy, with oil giants Chevron and ExxonMobil winning more than two percent as crude prices jumped on worries that stiff sanctions on Russia could prompt the country, a major crude and natural gas exporter, to curtail investment or weaponize their energy assets.

Shares of weapons makers also moved higher, including Lockheed Martin, which gained 2.8 percent and Northrop Grumman, which rose 4.5 percent.

Earlier in Europe, London equities slid after economic data pointed to a December slowdown amid the Omicron variant of Covid-19.

The UK economy grew by a record 7.5 percent last year to rebound from the pandemic crash, but shrank by a modest 0.2 percent in the final month, official data showed.

In the eurozone, Frankfurt and Paris stocks banked lower, mirroring Asia after overnight Wall Street losses.

- Key figures around 2150 GMT -
New York - Dow: DOWN 1.4 percent at 34,738.06 (close)

New York - S&P 500: DOWN 1.9 percent at 4,418.64 (close)

New York - Nasdaq: DOWN 2.8 percent at 13,791.15 (close)

London - FTSE 100: DOWN 0.2 percent at 7,661.02 (close)

Frankfurt - DAX: DOWN 0.4 percent at 15,425.12 (close)

Paris - CAC 40: DOWN 1.3 percent at 7,011.60 (close)

EURO STOXX 50: DOWN 1.0 percent at 4,153.23 (close)

Hong Kong - Hang Seng Index: DOWN 0.1 percent at 24,906.66 (close)

Shanghai - Composite: DOWN 0.7 percent at 3,462.95 (close)

Tokyo - Nikkei 225: Closed for a holiday

Euro/dollar: DOWN at $1.1351 from $1.1428 late Thursday

Pound/dollar: UP at $1.3564 from $1.3557

Euro/pound: DOWN at 83.64 pence from 84.29 pence

Dollar/yen: DOWN at 115.48 yen from 116.01 yen

Brent North Sea crude: UP 3.3 percent at $94.44 per barrel

West Texas Intermediate: UP 3.6 percent at $93.10 per barrel



Gulf Stocks Rise on Hopes for Renewed US-Iran Diplomacy

An investor looks up at screens displaying stock information at the Dubai Financial Market, June 17, 2013. REUTERS/Jumana El Heloueh/File Photo
An investor looks up at screens displaying stock information at the Dubai Financial Market, June 17, 2013. REUTERS/Jumana El Heloueh/File Photo
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Gulf Stocks Rise on Hopes for Renewed US-Iran Diplomacy

An investor looks up at screens displaying stock information at the Dubai Financial Market, June 17, 2013. REUTERS/Jumana El Heloueh/File Photo
An investor looks up at screens displaying stock information at the Dubai Financial Market, June 17, 2013. REUTERS/Jumana El Heloueh/File Photo

Gulf stock markets rose in early trade on Thursday, buoyed by hopes that diplomatic efforts between the United States and Iran could resume after the two sides exchanged recriminations this week.

Qatar's prime minister is due to visit Tehran on Thursday in an effort to revive diplomacy after Washington pledged to increase economic pressure on Iran by targeting its trading partners with sanctions.

Meanwhile, Iran and Oman are finalizing details ‌of an agreement ‌on control of the Strait ‌of ⁠Hormuz, a senior ⁠Iranian source said on Wednesday. Iran's Revolutionary Guards said the two countries had agreed on how to share management of the strategic waterway, which links major Gulf oil producers to global markets.

Saudi Arabia's benchmark index edged up 0.1%, with most stocks in positive territory. National Industrialization Company climbed 3.6%, while oil giant Saudi Aramco gained 0.5%.

Saudi Aramco has offered additional crude for September loading outside the Strait of Hormuz, four sources familiar with the matter said on Wednesday, after the producer sold at least 4 million barrels to China this month.

Dubai's main index rose 0.4%, with most constituents advancing. Etihad Energy gained 2.9%, while ⁠Emirates Central Cooling Systems added 1.3%.

Abu ‌Dhabi's benchmark climbed 0.3%, ‌supported by a 1.3% increase in conglomerate Alpha Dhabi ‌Holding and a 1.2% rise in First Abu Dhabi ‌Bank , the United Arab Emirates' largest lender.

Qatar's index gained 0.5%, led by communication and energy shares. Telecoms operator Ooredoo advanced 1.9% and Qatar Gas Transport rose 1%.
QatarEnergy ‌has issued a spot tender to sell light and full-range naphtha cargoes on a ⁠free-on-board ⁠basis from Ras Laffan port, located inside the Strait of Hormuz, traders said. A document reviewed by Reuters on Wednesday confirmed the tender.


Oil Extends Losses on Hopes Middle East Talks Could Ease Supply Woes

A worker rests next to an oil pump on a sunny day in Baku, Azerbaijan, June 16 , 2015. (Reuters)
A worker rests next to an oil pump on a sunny day in Baku, Azerbaijan, June 16 , 2015. (Reuters)
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Oil Extends Losses on Hopes Middle East Talks Could Ease Supply Woes

A worker rests next to an oil pump on a sunny day in Baku, Azerbaijan, June 16 , 2015. (Reuters)
A worker rests next to an oil pump on a sunny day in Baku, Azerbaijan, June 16 , 2015. (Reuters)

Oil prices fell more than $1 on Thursday, extending a streak of losses, on expectations that talks between Iran and Qatar might open the Strait of Hormuz and reduce supply disruptions from the Middle East war.

Brent crude futures were down $1.36, or 1.55%, to $86.48 a barrel at 0800 GMT, in line for a fourth day of declines. West Texas Intermediate crude futures fell $1.40, or 1.7%, to $80.83, in line for a fifth ‌day of ‌losses, Reuters reported.

"Oil has weakened again today as the market prices ‌in ⁠rising expectations that a ⁠deal could materialize which would increase shipping numbers through the Strait of Hormuz," KCM chief market analyst Tim Waterer said.

"If Hormuz were to reopen more fully, a further leg lower in crude is possible, but the market is unlikely to price a complete return to pre-conflict levels overnight."

Qatar's prime minister will head to Iran on Thursday to relaunch diplomatic talks to end the conflict, which is nearly six ⁠months old.

The visit comes as the war nears its ‌sixth month with fighting largely paused but ‌no diplomatic breakthrough in sight. Both sides are at odds over control of the Strait ‌of Hormuz, a chokepoint for global oil supplies that Tehran has used ‌as leverage.

The strait, which handled about one-fifth of global daily oil and liquefied natural gas supplies before the conflict began in late February, has been at the center of concerns over global energy supplies because of its critical role as a transit route for exports ‌from major Gulf producers. Shipping traffic at the strait rose slightly on Wednesday despite the standoff, data showed.

A senior Iranian ⁠source on Wednesday ⁠said Iran and Oman were working on finalizing details of an agreement to control the Strait of Hormuz, after Iran's Revolutionary Guards said the two countries had agreed how to share the waterway.

The US has halted its attacks on Iran for about a month and is seeking to impose greater economic pressure on Iran, which has raised investors' expectations for an easing of the Gulf supply disruptions.

"At the heart of the dispute remains Iran's nuclear program and that is unlikely to be resolved quickly ... Iran also understands the importance of its geographical position and the leverage that the Strait of Hormuz provides, so the risk of prolonged uncertainty remains," said Priyanka Sachdeva, head of market insights at Phillip Nova.


Gold Drifts Higher, Eyes on Fed Chair Warsh's Comments

AFP_A worker displays a one kilogram gold bullion bar at the ABC Refinery in Sydney
AFP_A worker displays a one kilogram gold bullion bar at the ABC Refinery in Sydney
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Gold Drifts Higher, Eyes on Fed Chair Warsh's Comments

AFP_A worker displays a one kilogram gold bullion bar at the ABC Refinery in Sydney
AFP_A worker displays a one kilogram gold bullion bar at the ABC Refinery in Sydney

Gold prices drifted higher on Thursday as so-called dollar debasement fears lingered, while attention shifted to highly anticipated remarks from US Federal Reserve Chair Kevin Warsh this week.

Spot gold was up 0.4% at $4,611.16 per ounce by 0630 GMT. US gold futures rose 0.3% to $4,664.50, Reuters reported.

The dollar-debasement narrative, coupled with concerns about the US budget deficit, remains supportive of gold in the medium term, said Kelvin Wong, a ‌senior market ‌analyst at OANDA.

Gold prices rose over 5% ‌last ⁠week after the ⁠US Treasury's move to expand buybacks of older long-dated bonds, which renewed dollar-debasement fears.

Warsh's remarks at the annual Jackson Hole symposium in Wyoming on Friday are expected to be closely watched for further direction.

"The market is awaiting the speech for greater clarity on how the Fed will navigate the current economic landscape. ⁠If he does not provide specific forward-looking monetary ‌policy guidance, current market pricing for ‌rate hikes is likely to remain largely unchanged," Wong said.

Markets see ‌a 36.1% probability of a September US rate hike and ‌a 72.1% chance by December, according to the CME FedWatch Tool.

Data on Wednesday showed that annual US inflation held steady in July, well above the Fed's 2% target, and the unexpected pause in the ‌decline from a recent Iran war-induced peak is likely to intensify the central bank's debate ⁠over whether rates ⁠should be lifted or held steady. On the geopolitical front, Qatar's prime minister will visit Tehran to relaunch diplomacy after the US and Iran traded recriminations over Washington's promise to increase economic pressure on Tehran.

Gold is considered a hedge against geopolitical and economic risks, but higher interest rates can diminish its appeal as it pays no interest.

"The $4,700 area remains an important short-term barrier. Gold may need to consolidate within the $4,500–$4,700 range before developing fresh momentum," said Linh Tran, market analyst at XS.com.

Spot silver gained 1% to $68.77, platinum rose 0.5% to $1,837.48 and palladium firmed 0.1% to $1,329.81.