LONDON —
Oil prices tumbled back to pre-war levels Wednesday as recession fears returned
to the forefront.
اضافة اعلان
Stocks were also
hit by the negative outlook for the global economy, while currency markets were
gripped by the prospect for interest rate hikes.
Oil prices
briefly climbed on Wednesday as
Russia’s President Vladimir Putin said his
country would stop delivering oil and gas supplies to countries that introduce
price caps.
G7
industrialized powers have vowed to move urgently towards implementing a price
cap on Russian oil imports to cut off a major source of funding for Moscow’s
military action in Ukraine.
But oil prices
then turned sharply lower, with Brent crude, the main international contract,
passing under $90 per barrel for the first time since February.
OPEC and its
allies earlier this week cut production targets for the first time in more than
a year in a bid to lift prices.
“While the
100,000 barrel cut wasn’t fundamentally significant, it was clearly intended as
a warning not to drive the price lower or face further cuts,” said OANDA
trading platform analyst Craig Erlam.
“Unfortunately,
it seems traders are in no mood to be told what to do and growth fears are
instead dictating the price direction.”
Recession
concerns also dampened sentiment towards equities, with European indices lower,
although Wall Street managed small gains at the open.
“Investors
appear reluctant to buy anything in this macro environment, where inflation is
soaring, global growth is weakening, and central banks are tightening,” said
City Index and Forex.com analyst
Fawad Razaqzada.
“Something must
fundamentally change before we see the onset of a serious recovery,” he added.
Recession fears
are being driven in large part by central banks moving aggressively to rein in
surging inflation.
The dollar
continues to gain strength from expectations of a third-straight blockbuster
hike to US interest rates later this month.
US Federal
Reserve (Fed) officials have lined up in recent weeks to say their main focus
is bringing inflation down from four-decade highs, even if that means tipping
the economy into recession.
The different
pace in lifting rates taken by central banks is fueling swings in currency
values.
The
European Central Bank is Thursday forecast to deliver another bumper rate increase,
mirroring aggressive moves by the Fed and Bank of England.
Nevertheless, it
has moved slower and the euro remains lodged below parity with the dollar.
Meanwhile, the
dollar rose to 144.99 yen — the Japanese currency’s weakest showing since 1998.
“The reason that
we are seeing this much strength in the dollar against the yen is purely
because of the difference in two central banks’ policies,” noted Naeem Aslam,
chief market analyst at AvaTrade.
“The Fed is as
hawkish as it can be, and the BoJ still doesn’t seem to be bothered much about
inflation or changing its stance on monetary policy.”
Japan’s finance
minister, Shunichi Suzuki, on Wednesday expressed concern about the yen’s drop.
“For now, we’re
monitoring with a sense of urgency how it’s developing, but if this continues,
it makes sense that we will take necessary measures,” he said, without
detailing what the measures might be.
The greenback
also struck 37-year peak against sterling, plagued by recession fears on the
eve of new
Prime Minister Liz Truss’s economic stimulus plan.
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