Oil prices sped higher on Thursday as the war in Ukraine drove a mad dash for resources in an ominous sign for global inflation, while Asian shares eked out gains after reassuring comments from the Federal Reserve helped Wall Street bounce.
Brent crude topped $117 per barrel and is now up almost 20% on the week, while everything from coal to natural gas and aluminium are on fire as Western nations tighten sanctions on Russia. “Russia supplies around 30% of Europe’s gas and oil imports and accounts for around 11% of world oil production,” said Shane Oliver, head of investment strategy at fund manager AMP. “In short, investors are worried about a stagflationary shock.”
The rush to commodities lifted resource-rich Australian stocks (.AXJO) 0.9%, while Indonesia (.JKSE) was just off a record high. Japan’s Nikkei (.N225) managed a 0.8% gain, while MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) nudged up 0.6%. MSCI added to Russia’s financial isolation by deciding to exile the country from its emerging markets index, while FTSE Russell said Russia would be removed from all its indices.
Fitch slashed Russia’s sovereign credit rating six notches to “junk” status, saying it was uncertain the country could service its debt, and Moody’s soon followed.
