US stocks rise as energy traders warn of recession due to looming oil shortages due to war in Ukraine

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U.S. stocks gained overnight, boosted by tech stocks, as markets absorb plans by the U.S. central bank to raise interest rates further to curb soaring inflation.

On Monday local time, US Federal Reserve Chairman Jerome Powell said inflation was “far too high” and pledged to take “the necessary steps” to combat rising prices.

The Dow Jones Index rose 0.6%, to 34,776, the S&P 500 rose 1.2%, to 4,514, and the Nasdaq rose 2%, to 14,118, at 7:05 a.m. AEDT .

Apple, Microsoft, Amazon, Meta and Alphabet were among the companies that lifted the S&P 500 and the Nasdaq.

Shares of sportswear company Nike rose after its quarterly profit and revenue were better than expected.

Tesla won by delivering its first German-made cars to its gigafactory in Gruenheide, its first European hub.

He said manufacturing issues that previously hampered production due to the pandemic have eased.

In London, the FTSE 100 index rose 0.5% to 7,477.

Australian stocks are expected to follow Wall Street higher, with the ASX SPI 200 index up 1.1% to 7,349 as of 7:20 a.m. AEDT.

The ASX 200 hit a two-month high yesterday following comments from Mr Powell.

Meanwhile, the Australian dollar rose nearly 1% to 74.66 US cents as of 7:10 a.m. AEDT.

Bitcoin rose 3.3% to $42,518 per digital coin.

War fuels recession fears

Major energy traders have warned of gas and diesel shortages in Europe as well as the potential for an economic recession as markets struggle to absorb the potential loss of around two million barrels of oil a day from Russia, one of the largest energy exporters in the world.

Chief executives of four of the biggest energy traders – Vitol, Gunvor, Mercuria and Trafigura – said the gas market had become dysfunctional due to unmanageable margin calls.

The war in Ukraine has restricted Russian exports and led to the highest oil prices since 2008.

However, oil prices fell slightly overnight as the European Union seemed less likely to ban Russian oil.

As of 7:15 a.m. AEDT, Brent crude fell 0.2%, to settle at US$115.48 a barrel.

Spot gold fell 0.8% to US$1,920.64 an ounce.

European Union foreign ministers are divided over calls for sanctions on Russian oil and gas supplies.

The EU depends on Russia for 40% of its gas.

France’s TotalEnergies is the latest global company to cut commercial ties with Russia, saying it will not renew contracts to supply Russian diesel and crude oil for its German refinery.

According to a Russian official, oil exports from Russia and Kazakhstan via the Caspian Pipeline Consortium from the Black Sea could drop by up to 1 million barrels of oil per day, or 1% of world oil production, due to of a damaged berth.

A storm in the Russian section of the Black Sea has damaged loading equipment belonging to CPC, one of the world’s largest pipelines that transports crude oil from Kazakhstan to world markets.

Pavel Sorokin, Russia’s deputy energy minister, said maintenance could take up to two months, which could lead to a drop in oil exports of up to one million barrels a day.

ABC/Reuters

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