Asian stocks fell sharply on Monday and European stocks are also expected to open significantly lower. The price of oil rose sharply, to the highest level since 2008. Investors seem to be fleeing into gold. The price of the precious metal has risen to its highest level since September 2020.
Stock markets in Asia fell sharply on Monday. Investors responded to reports that the United States is considering boycotting Russian oil and gas. On the Tokyo stock exchange, the star index Nikkei ended with a loss of 2.94 percent at 25,221.41 points. That is the lowest level since the end of 2020. The broad-based Topix index fell 2.76 percent to 1,794.03 points.
The Chinese export figures were overshadowed. Exports in January and February increased by 16.3 percent in dollars compared to a year earlier. That was more than what analysts had generally anticipated. It was announced on Saturday that the Chinese government is targeting economic growth of 5.5 percent by 2022. That is the lowest percentage in more than thirty years.
The Chinese yuan rose to an all-time high against its main trading peers on Monday. Currency markets are also reacting strongly to the war in Ukraine and Western sanctions. The euro has become worth a lot less.
The European stock markets are also expected to open significantly lower, according to financial media.
Stocks are on a loss against the background of the Russian invasion of Ukraine and rising oil prices. US Secretary of State Antony Blinken had also promised on CNN possible additional Western sanctions against Russia, which could target Moscow’s oil exports. He mentioned “a very active discussion” with “our European partners”.
Oil prices at highest level since 2008
As a result, oil prices have risen to the highest level since 2008. Around midnight Belgian time, the price of a barrel of crude oil of the North Sea type Brent flirted with the 140 euro limit. This brings it closer and closer to the record of 147.5 euros set in July 2008.
The price of a barrel of West Texas Intermediate (WTI) oil rose above $130 a barrel for the first time since 2008. After that, the price dropped a bit again, to USD 126 per barrel (+9 percent).
Gold price beyond $2,000
The gold price has passed the $2,000 mark in Asian trading Monday morning. The value of the precious metal peaked at $2,000.86 an ounce.
This is the highest gold price since September 2020. Investors see the precious metal as a safe haven against the background of the war in Ukraine.
Wheat prices are also rising
Wheat prices also continue to rise as a result of the war in Ukraine. The war has halted grain exports from the besieged country, but also from Russia. Also, farmers in Ukraine cannot go on land to set up new crops, which will also contribute to the shortages in the long term and thus to higher prices. This will affect the prices consumers pay for bread, pizza, pasta and other grain products.
Ukraine and Russia account for more than a quarter of the world’s wheat exports. Due to the ongoing fighting, ports have been closed, among other things, which has brought transport to a standstill and the logistics have been thrown into disarray. The war also threatens this year’s wheat planting in Ukraine as farmers could become involved in the fighting. The shortages are likely to spill over into the next season, or possibly even longer.
On the futures trade, the price of wheat rose by about 7 percent. As a result, prices continued to rise, while the wheat price had already risen by 41 percent last week. That was the highest price increase in one week in more than sixty years.
Wheat prices are at their highest level since the food crisis of 2008. According to the United Nations, food prices are already at an all-time high and will rise further. This will exacerbate importers’ problems and lead to even more people suffering from hunger.
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