Asia’s stock markets fell dramatically Tuesday, oil prices recovered again, and nickel prices spiked to above $100,000 as investors attempted to gauge the impact of the Ukraine war.
Vladimir Putin’s invasion of Ukraine has sent commodity prices to record or multiyear highs, causing observers to re-evaluate their outlook for the global recovery with some now warning of a period of soaring inflation and low growth.
A sea of red swept across trading floors on Monday after the United States reportedly considered banning the import of crude from Russia, the world’s third-largest producer, sending Brent crude oil to almost $140 for the first time since 2008.
Despite easing back slightly from that peak, gold remains elevated and continued to rise on Tuesday.
Germany’s Chancellor Olaf Scholz said Russian oil and gas are essential to the continent’s economy and did not support the US proposal. One-quarter of the EU’s oil and 40 percent of its gas are imported from Russia.
Stock Markets Uncertainty
In the meantime, Russian President Vladimir Putin retaliated against European sanctions by warning that it might cut off natural gas supplies to Europe via the Nord Stream 1 pipeline. This would add further upward pressure to crude as investors looked for alternatives.
Prices for gas in Europe hit record highs on Monday. Other products sourced from Ukraine and Russia also rose. Sock markets saw wheat at a record high and nickel breaking $100,000 for the first time.
Among other factors, the crisis strikes just as uncertainty is rising because of surging oil prices due to a spike in demand, tight supplies and pandemic-related supply chain disruptions.
At the same time, central banks are starting to wind back the ultra-loose monetary policies they implemented at the start of the pandemic to control prices.
In light of the war, analysts have reduced their expectations for how much and how quickly officials will tighten. However, they still see a tougher investing environment in the future.
Stock markets in Tokyo, Hong Kong, Singapore, Seoul, Wellington and Bangkok all lost more than 1%, while Shanghai and Taipei were off more than 2%.
Manila sank more than 4%. Stock markets in Sydney, Jakarta and Mumbai were also in the red.