The US stock market fell in trading on Monday (February 14), as tensions escalated between Russia and Ukraine and the possibility of the US Federal Reserve (Fed) stepping up monetary policy tightening caused the investors worry. Oil prices hit a new seven-year high on fears of supply disruptions if Moscow takes military action against its neighbour.
The indices fluctuated strongly throughout the session and closed in the red.
At the close, the Dow Jones lost 171.89 points, or 0.5%, to 34,566.17 points. During the session, sometimes the index dropped to more than 400 points.
The S&P 500 at one point fell 1.2% and ended the session with a loss of 0.4% to 4,401.67 points. Nasdaq at one point fell 0.9% and returned to the level of almost flat at the close, with 13,790.92 points.
Among other developments showing investor anxiety about geopolitical risks, crude oil prices rose to a more than seven-year high and gold futures hit a three-month high.
There are a number of signs that the Russian-Ukrainian conflict is escalating. US Secretary of State Antony Blinken ordered the closure of the US embassy in Kyiv, the capital of Ukraine, citing a "strong increase in Russian forces" concentrated on the Ukrainian border. Ukrainian President Volodymyr Zelensky said he had heard that Wednesday could be the day Russia attacked.
“Investors are insecure because of rising geopolitical tensions and oil prices are approaching the $100/barrel mark. But after Friday’s big drop, the market performance has been a blessing," said LPL Financial strategist Ryan Detrick.
Besides geopolitical concerns, the possibility that the Fed will raise interest rates several times in a row this year also continues to cast a shadow over investor sentiment.
In an interview with CNBC, the President of the Federal Reserve Bank of St. Louis, Mr. James Bullard, said that the central bank needs to be fierce in the fight against inflation. In January, the US consumer price index (CPI) increased by the most since 1982, prompting some forecasters such as Citigroup and Goldman Sachs to raise their forecasts for the number of Fed rate hikes this year. up 7 times.
“I really think we need to accelerate the withdrawal of easing monetary policy, faster than initially expected. We are being surprised by the high inflationary pressures,” said Mr. Bullard. “The credibility of the Fed is at stake, and the Fed really needs to react to the data. But I think we can do it in an organized way and without causing disturbance in the market.”
“It is true that the Fed is about to raise rates, inflation is out of control, and geopolitical tensions are high. But let’s not forget that we’re closing in on another very good financial reporting season," he said. “There are a lot of worries in the market, but a strong financial report season, along with the relative optimism of companies about the future of the economy, are factors that can give investors hope. hope”.
To date, about 70% of companies in the S&P 500 have announced their results for the fourth quarter of 2021, of which 77% have exceeded forecasts, according to data from FactSet. Compared to the same period last year, the profits of these companies increased by about 30%.
Brent crude oil futures in London rose $2.04/barrel, or 2.2%, to close at $96.48/barrel. During the session, at one point, the price of Brent oil reached 96.78 USD/barrel, the highest level since September 2014.
WTI oil futures in New York increased by 2.36 USD/barrel, or 2.5%, to close at 95.46 USD/barrel. During the session, there was a time when the price of WTI oil reached 95.82 USD/barrel, the highest since September 2014.
“The market is still extremely sensitive to developments on Russia-Ukraine,” said John Kilduff, fund manager at Again Capital. “The situation is tense at a very high level. The view of the market right now is to buy it first, then calculate it later."
Russia is one of the world’s largest crude oil producers, with an output capacity of about 11.2 million barrels per day, said Rystad Energy senior analyst Nishant Bhushan.
“Any oil supply disruption from Russia could push Brent and WTI prices soaring past $100 a barrel, in a market that is already struggling to meet rising demand from other economies. The economy is recovering from the pandemic," Bhushan said.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, the OPEC+ group, are implementing a plan to increase oil production by 400,000 barrels per day (bpd) per month, in the immediate term to March. The pledge is, but OPEC+ is facing limited reserve capacity and is unable to raise output at the promised rate.
The International Energy Agency (IEA) has called on OPEC+ to close the gap between commitment and action. The IEA says that the gap between the target and actual OPEC+ output is widening.
In addition, the market is also watching the US-Iran nuclear talks. This negotiation is showing many positive signs, and if there is an agreement, Iran’s oil supply can increase by 1.3 million barrels per day, helping to relieve the current oil supply shortage pressure on the market. Global.
In the virtual currency market, Bitcoin price maintains a slight uptrend. At more than 7am this morning (February 15), the Bitcoin price according to data from Coinmarketcap.com stood at $42,574, up more than 1% compared to the time 24 hours ago.
