World Shares Mixed, Oil Down $5.50 per Barrel
Shares rose in Europe after a mixed session in Asia on Monday, where Hong Kong’s Hang Seng index sank 5 percent after the neighboring city of Shenzhen was ordered into a shutdown to combat China’s worst COVID-19 outbreak in two years.
Benchmarks rose in Frankfurt, Paris, and Tokyo and U.S. futures were higher.
Oil prices retreated against the backdrop of uncertainty from the war in
Ukraine.
Germany’s DAX advanced 2.8 percent to 14,003.93, while the CAC 40 in Paris picked up 1.7 percent to 6,367.58. Britain’s FTSE 100 gained 0.3 percent to 7,178.48.
The future for the Dow Jones Industrial Average rose 1 percent, auguring a positive start for the week’s trading. The S&P 500 future was 0.7 percent higher.
The spreading virus outbreaks in China are compounding worries over supply chain disruptions both from the pandemic and from the war.
A vital manufacturing and technology hub of 17.5 million people, Shenzhen is home to some of China’s most prominent companies, including telecom equipment maker Huawei Technologies Ltd., electric car brand BYD Auto, Ping An Insurance Co., and Tencent Holding, operator of the WeChat message service.
Foxconn, supplier to Apple and other electronics brands, said it had suspended factory lines in Shenzhen due to the shutdown. In a notice to Taiwan’s stock exchange, its listed company Hon Hai Precision Industry, the world’s largest contract manufacturing company, said it did not expect the suspension to have a major impact on its business.
Hon Hai shares lost 1 percent on Monday.
The Hang Seng index dipped 5.4 percent but regained some lost ground to close 5 percent lower at 19,531.66. The exchange’s tech index dropped 11 percent.
The Shanghai Composite index slipped 2.6 percent to 3,223.53. The A-share index in Shenzhen’s smaller market lost 2.9 percent.
Infection numbers in mainland China are low compared with other countries and with Hong Kong, which reported more than 32,000 new cases Sunday. But Beijing’s “zero tolerance” strategy has led to lockdowns of entire cities to find and isolate every infected person.
In other Asian markets, Tokyo’s Nikkei 225 index rose 0.6 percent to 25,307.85 and the S&P/ASX 200 in Australia gained 1.2 percent to 7,149.40. South Korea’s Kospi lost 0.6 percent to 2,645.65.
The Ukraine
crisis and central bank efforts to fight inflation remain the focus for most markets.
Russia’s military forces were keeping up their campaign to capture Ukraine’s capital as residents of other besieged cities held out hope that renewed diplomatic talks might open the way for more civilians to evacuate or emergency supplies to reach them.
A fourth round of talks began on Monday between Ukrainian and Russian officials.
On Friday, the S&P 500 fell 1.3 percent, and the Dow industrials lost 0.7 percent. The Nasdaq composite index gave up 2.2 percent and the Russell 2000 index of smaller companies slipped 1.6 percent.
World markets have been rocked by dramatic reversals as investors struggle to guess how Russia’s invasion of Ukraine will affect prices of oil, wheat, and other commodities produced in the region.
That’s raising the risk the U.S. economy may struggle under a toxic combination of persistently high inflation and stagnating growth. The Federal Reserve is expected to raise interest rates at its meeting this week as it and other central banks act to stamp out the highest inflation in generations, while trying to avoid causing a recession by raising rates too high or too quickly.
U.S. stocks are about 10 percent below peaks hit earlier this year, while crude oil prices are more than 40 percent higher for 2022.
U.S. benchmark crude oil lost $6.51 to $102.82 per barrel in electronic trading on the New York Mercantile Exchange. It surged $3.31 per barrel on Friday to $109.33 per barrel.
Brent crude oil, the standard for international pricing, declined $5.40 to $107.27 per barrel.
The U.S. dollar rose to 118.02 Japanese yen from 117.35 yen. The euro strengthened to $1.0952 from $1.0926.
European Shares Rise on Ukraine Hopes; Volkswagen Surges on Strong Results
European
stocks rose on Monday as investors pinned their hopes on diplomatic efforts by
Ukraine and Russia to end weeks-long conflict, while shares in Volkswagen surged after the German carmaker doubled its operating profit.
The pan-European STOXX 600 index gained 1.0 percent, extending gains from Friday when Russian President Vladimir Putin signaled a positive shift in talks with Ukraine.
Russia and Ukraine gave their most upbeat assessments following weekend negotiations, even as Russia attacked a base near the Polish border and fighting raged elsewhere.
“No sign yet of hostilities in Ukraine easing, but risk assets are beginning to behave as if most of the negativity is now priced in,” said Ian Williams, economics & strategy research analyst at Peel Hunt.
Auto stocks climbed 4.1 percent to lead gains among sectors. Volkswagen AG surged 6.6 percent as higher prices and a more favorable product mix boosted its operating profit.
However, China-exposed miners, which have outperformed recently, fell 1.8 percent, as surging COVID-19 infections in the world’s top metals consumer fanned worries over economic growth prospects.
Shares of luxury brands such as LVMH and Richemont, which depend on China for a large part of their sales, also declined.
Investors waited for policy decisions from the U.S. Federal Reserve and the Bank of England later this week, with both the central banks expected to raise interest rates.
Banks gained 2.8 percent, extending a rebound from one-year lows hit last week as investors ramped up expectations of rate hikes to combat soaring inflation.
Hopes of progress in peace talks sent oil prices lower. Oil has surged this month after Western sanctions against Russia over its invasion of Ukraine raised concerns about supply disruptions.
French power utility EDF slipped 1.5 percent after it warned on its 2022 profit outlook, saying that wholesale energy price caps and lower nuclear output problems are likely to impact the group’s capability to achieve financial targets.
Dutch tech investor Prosus, which owns a stake in China’s Tencent, tumbled 10.6 percent, reflecting worries over regulatory concerns.
Telecom Italia climbed 8.0 percent after it said it would start formal talks with KKR to assess the U.S. fund’s potential 10.8 billion euro ($11.8 billion) offer for Italy’s biggest phone group.
Russia’s Claims It Killed up to 180 Foreign Mercenaries in Yavoriv Strike Are ‘Pure Propaganda’: Ukraine Officials
Ukrainian officials have called
Russia’s claims it has killed up to 180 foreign mercenaries during a strike on Yavoriv military base “pure Russian propaganda.”
The country’s Defense Ministry spokesperson Markiyan Lubkivsky told CNN that the claims are simply not true and that no foreigners have yet been confirmed among the dead at the training area, which is around 12 miles away from the Polish border and roughly 25 miles from Lviv, located in western
Ukraine.
“This is not the truth. Pure Russian propaganda,” Lubkivsky said.
Lubkivsky’s comments come after Russia’s Defense Ministry on March 13 said that up to 180 “foreign mercenaries” and a large consignment of foreign weapons were destroyed in the attack at the Yavoriv International Center for Peacekeeping and Security.
Russian Ministry of Defense spokesperson Maj. Gen. Igor Konashenkov said in a
briefing that high-precision long-range weapons were used to strike the Ukrainian armed forces training centers at Yavoriv, as well as a separate facility in the village of Starichi.
“At these facilities, the Kyiv regime deployed a point for the training and combat coordination of foreign mercenaries before being sent to the areas of hostilities against Russian military personnel, as well as a storage base for weapons and military equipment coming from foreign countries,” Konashenkov said, according to the Moscow-based RIA news agency.
“As a result of the strike, up to 180 foreign mercenaries and a large consignment of foreign weapons were destroyed. The destruction of foreign mercenaries who arrived on the territory of Ukraine will continue.”
The defense ministry added that Moscow would continue its attacks against foreign mercenaries.
The Lviv regional administration said in a statement on Sunday that at least 35 people were killed in the attack after around 30 missiles were fired from warplanes over the Black and Azov seas and hit the military base.
Another 134 people were hospitalized in the incident, Lviv Governor Maksym Kozytsky said in a Facebook statement.
Ukraine said foreign military instructors have previously worked at the Yavoriv military base. However, a NATO official told Reuters that there were no personnel from the alliance there.
Konashenkov’s comments come after
Moscow warned on Saturday that it may target NATO countries’ supplies to Ukraine if they continue to supply weapons to the country.
“We warned the United States that the orchestrated pumping of weapons from a number of countries is not just a dangerous move, it is a move that turns these convoys into legitimate targets,” Russian Deputy Foreign Minister Sergei Ryabkov told Russian state-run media on Saturday.
He added that Moscow had warned “about the consequences of the thoughtless transfer to Ukraine of weapons like man-portable air defense systems, anti-tank missile systems, and so on.”
Ukraine’s President Volodymyr Zelensky has repeatedly called on Western nations to deliver more weapons to his country, specifically for Russian-made planes, so that it can defend itself amid the Russian attack.
Zelensky has also repeatedly called on the West to implement a no-fly zone over Ukraine.
However, Russian President Vladimir Putin has warned that he would view any country that declares a no-fly zone over Ukraine as a participant in the “armed conflict.”
Meanwhile, U.S. President Joe Biden has vowed to defend “every inch of NATO territory,” calling an attack against one member of the alliance “an attack against all.”
Power Supply Resumed at Chernobyl After Nuclear Plant Was Seized by Russian Forces: Officials
Ukraine says it has resumed the power supply to the
Chernobyl nuclear power plant after it was seized by
Russian forces in February, energy officials in Kyiv said Sunday.
A broken power line at the site was reportedly restored at
18:38 CET by the repair personnel of Ukrenergo, Ukraine’s transmission system operator, meaning external electricity supplies to the plant can now be resumed.
Ukraine’s Energy Minister German Galushchenko said in a
statement that specialists from the national power grid had been able to successfully restore the connection.
“Today, thanks to the incredible efforts of (Ukrainian energy) specialists, our nuclear power engineers and electricians managed to return the power supply to the Chernobyl nuclear power plant, which was seized by the Russian occupiers,” Galushchenko said.
“Our Ukrainian energy engineers, by risking their own health and lives, were able to avert the risk of a possible nuclear catastrophe that threatened the whole of Europe,” he added.
The power supply to Chernobyl is used to keep running pumps that keep thousands of spent nuclear fuel cool, thus preventing radiation leaks.
Russian forces captured Chernobyl, which is located along the Ukraine–Belarus border and about 60 miles north of Kyiv, just days after invading Ukraine on Feb. 24.
Ukrainian officials
told the International Atomic Energy Agency (IAEA) that power had been cut off from the plant on Wednesday and it had to use emergency generators.
Officials said that there was enough diesel fuel to run the on-site generators for 48 hours, while the IAEA said there had been “no critical impact” to safety after officials, including Ukrainian Foreign Minister Dmytro Kuleba, warned about a potential radiation leak overnight.
A nuclear accident at the Chernobyl nuclear power plant in 1986 killed hundreds and spread a radioactive cloud west across Europe.
The Ukrainian government
warned that, just like in the previous Soviet disaster, the wind could transfer a radioactive cloud across Ukraine, Russia, and other parts of Europe.
On March 10, Ukraine officials lost all communications with the power plant, the country’s regulatory authority informed
IAEA, meaning that they could not provide IAEA with updated information about the site.
Ongoing fighting around the nuclear power plant has made it impossible to carry out repairs, the government said.
However, Russian foreign ministry spokeswoman, Maria Zakharova,
told state-run outlets on March 9 that the site was operating as normal and that both Russian and Ukrainian specialists were jointly controlling the situation.
Zakharova also said that the Ukrainian government’s allegations regarding a potential radiation threat were false.
“The actions of the Russian military in this dangerous situation were motivated by the necessity to prevent a nuclear provocation from Ukrainian nationalists, who seem to have nothing to lose. As a matter of fact, they have been trained to do it. That is why Russian troops are taking Ukraine’s nuclear facilities under control,” Zakharova said.
IAEA Director General Rafael Mariano Grossi
said Sunday that the team of Ukrainian specialists had repaired one of two lines that had been damaged at the plant, meaning they would now be able to deliver all required off-site power to the plant.
However, Grossi expressed concerns over the future safety of the plant and has proposed a “framework” that would enable IAEA to provide technical assistance to ensure the safe operation of the plant.
Grossi said he has discussed the proposal with the Ukrainian and Russian Foreign Ministers Dmytro Kuleba and Sergei Lavrov, last week.
“This is a positive development as the Chornobyl NPP has had to rely on emergency diesel generators for several days now,” Grossi said. “However, I remain gravely concerned about safety and security at Chornobyl and Ukraine’s other nuclear facilities.”
Ukraine’s Farmers Stalled, Fueling Fears of Global Food Shortages
The Russian invasion of
Ukraine threatens millions of tiny spring-time sprouts that should emerge from stalks of dormant winter wheat in the coming weeks. If the farmers can’t feed those crops soon, far fewer of the so-called tillers will spout, jeopardizing a national wheat harvest on which millions in the developing world depend.
The wheat was planted last autumn, which, after a brief growing period, fell dormant for the winter. Before the grain returns to life, however, farmers typically spread fertilizer that encourages the tillers to grow off the main stalks. Each stalk can have three or four tillers, increasing the yield per wheat stalk exponentially.
But Ukrainian farmers – who produced a record grain crop last year – say they now are short of fertilizer, as well as pesticides and herbicides. And even if they had enough of those materials, they can’t get enough fuel to power their equipment, they add.
Elena Neroba, a Kyiv-based business development manager at grain brokerage Maxigrain, said Ukraine’s winter wheat yields could fall by 15 percent compared to recent years if fertilizers aren’t applied now. Some farmers warn the situation could be much worse.
Some Ukrainian farmers told Reuters their wheat yields could be cut in half, and perhaps by more, which has implications far beyond Ukraine. Countries such as Lebanon, Egypt, Yemen, and others have come to rely on Ukrainian wheat in recent years. The war has already caused wheat prices to skyrocket—rising by 50 percent in the last month.
The Ukrainian farming crisis comes as food prices around the world already have been spiking for months amid
global supply chain problems attributed to the COVID-19 pandemic. World food prices hit a record high in February, and have risen over 24 percent in a year, the U.N. food agency said last week. Agriculture ministers from the world’s seven largest advanced economies were due Friday to discuss in a virtual meeting the impact of Russia’s invasion on global food security and how best to stabilize food markets.
International food and feed prices could rise by up to 20 percent as a result of the conflict in Ukraine, triggering a jump in global malnourishment, the United Nations food agency said on Friday.
Ukraine and Russia are major wheat exporters, together accounting for about a third of world exports- almost all of which passes through the Black Sea.
Svein Tore Holsether, president of Norway-based Yara International, the world’s largest maker of nitrogen-based fertilizers, said he is worried that tens of millions of people will suffer food shortages because of the farming crisis in Ukraine. “For me, it’s not whether we are moving into a global food crisis,” he said. “It’s how large the crisis will be.”
Ukrainian officials say they are still hopeful the country will have a relatively successful year. Much of that hope rests with farmers in the west of the country, which, so far, remains distant from the shooting.
But officials are taking measures to protect domestic supplies to ensure Ukraine’s population gets fed – posing another possible hit to export shipments. Agriculture Minister Roman Leshchenko said on Tuesday the country was banning the export of various staples, including wheat. Leshchenko has acknowledged the threat to Ukraine’s food supply and that the government was doing what it can to help farmers.
“We understand that food for the entire state depends on what will be in the fields,” he said in televised remarks Monday.
Moscow says it is conducting a special military operation in Ukraine to demilitarize and capture dangerous nationalists. It has denied deliberately targeting civilians and civil infrastructure, despite documented attacks on hospitals, apartment buildings and railroads.
Grain exports are a cornerstone of Ukraine’s economy.
In the coming weeks, farmers should also start planting other crops, such as corn and sunflowers, but they are struggling to get the seeds they need, said Dykun Andriy, chairman of the Ukrainian Agricultural Council, which represents about 1,000 farmers cultivating five million hectares.
Andriy warned that the fuel is the critical problem now. Unless farmers can get diesel to run their equipment, spring farmwork will be impossible and this year’s harvests doomed. “
Farmers are desperate,” he said. “There is a big risk that we don’t have enough food to feed our people.”
Maxigrain’s Neroba said farmers are facing fuel shortages because military needs take priority.
Ukrainian farmer Oleksandr Chumak said little work is happening in his fields, some 200 km north of the Black Sea port of Odessa. He farms 3,000 hectares (about 7,500 acres) where he grows wheat, corn, sunflowers and rapeseed. Even if he had enough fuel to get his equipment into the fields, he said he had insufficient fertilizer for all of his crops and no herbicides.
“Usually we have maybe six to seven tons (of wheat) per hectare. This year, I think that if we get three tons per hectare, it will be very good,” Chumak said. He added he remains hopeful that Ukrainian farmers will find a way to grow enough food to feed their countrymen, but he does not expect much will be exported.
In northern Ukraine, he said friends of his have been reduced to skimming fuel from a ditch that was filled with diesel after a Russian attack on a train spilled fuel from several tankers. Other friends, in the occupied areas near Kherson, are scavenging diesel from ambushed and abandoned Russian tanker convoys, Chumak said.
Currently, he spends much of his time preparing for a Russian assault. “I live in Odessa. Every day I see rockets fly over my house.”
Val Sigaev, a grain broker at R.J. O’Brien in Kyiv, who evacuated last week, said it is unclear how much of the usual spring farming — planting and fertilizing — would be possible. High prices for natural gas – a major input for fertilizer – sent fertilizer prices up, so some farmers postponed purchases.
“Some people think we could plant as much as half of the crop,” Sigaev said. “Others say that only the West will see plantings and what is produced will be strictly for Ukrainian needs.”
The situation is especially dire in the southern port city of Kherson, the first Ukrainian city Russia captured after invading the country on Feb. 24. Spring-like weather adds to farmers’ urgency, if they don’t tend to their fields now this year’s harvest will be a bust.
Andrii Pastushenko is the general manager of a 1,500-hectare farm just west of the city, near the mouth of the Dnipro River. Last autumn, they sowed about 1,000 hectares of wheat, barley and rapeseed. His farm workers need to get into those fields now, but can’t, he says, and they’ve lost access to fuel. “We’re completely cut off from the civilized world and the rest of Ukraine.”
Additionally, many of Pastushenko’s 80 workers cannot come to work at the farm because they live a few miles to the north, across the front line. The manager’s problems are compounded because the region is drier than other agricultural areas of the country and his fields need to be irrigated. And that too requires fuel.
Unlike many, Pastushenko has a 50-metric ton nitrogen-based fertilizer stockpile. With the fighting all around him, however, he’s not sure that’s such a good thing: Fertilizer is highly explosive. “If something drops from a helicopter, it could blow the whole place,” he said.
He said he fears the harvest will be poor. Last year, his wheat and barley fields yielded about five metric tons per hectare. If he doesn’t spray insecticide – which he says he can’t get – and spread fertilizer, he doubts he’ll get a third of that amount.
“I’ve no idea whether we’ll be able to harvest something,” he said. “Something will come off the ground, but it won’t be enough to feed our cattle and pay our staff.”
About 150 km west of Pastushenko’s farm is the Black Sea port of Odessa, which remains under Ukrainian control. In peacetime, much of Ukrainian agricultural exports find their way onto ships at the port, Ukraine’s busiest. Today, no ships are leaving and the city is besieged by Russian forces.
Much of Ukraine’s harvest was due to be exported to North Africa, the Middle East, and the Levant. According to the United Nations’ World Food Program (WFP), Ukraine supplies Lebanon with more than half of its imported wheat, Tunisia imports 42 percent, and Yemen nearly a quarter. Ukraine has grown to become WFP’s largest supplier of food.
For some countries, rising prices could hammer governments as well as consumers because of state food subsidies.
Egypt, which has become increasingly dependent on Ukrainian and Russian wheat over the past decade, heavily subsidizes bread for its population. As the price of wheat rises, so will pressure on the government to raise bread prices, said Sikandra Kurdi, a Dubai-based research fellow at the International Food Policy Research Institute.
The country’s food subsidy program currently costs the government about $5.5 billion annually. Currently, nearly two-thirds of the population can buy five loaves of round bread daily for 50 cents a month.
Other developing countries with similar subsidies will also struggle with rising wheat prices. In 2019, protests over bread price increases in Sudan contributed to the overthrow of the head of state, Omar al-Bashir.
For countries that provide large subsidies, rising food prices will mean that either governments take on more debt or consumers will pay higher prices, Kurdi said.
The difference between the two is that Russia is beginning to clamp down on free speech and putting high-ranking people in jail.......when they're just beating down on a small ex-Soviet Republic. This is like what if Hitler started freaking out before his forces took Poland. Everything from the Russian side indicated this would be a quick fight, instead, they're getting bogged down for weeks with no end in sight. Also, another difference between Russia and the German Reich? He was open to realism in his first few years of the war. Hitler didn't purge the generals until near the end, whereas Putin practically purged anyone who didn't sing his praises. It was only by the end in 1945, did he lament that he didn't purge the generals like Stalin did. Meanwhile, Putin surrounded himself with yes-men Soviet-style, and the result is what we saw now: with him being lied to until the very end, because anyone with the balls to tell him that he was about to commit political and military suicide was gone.
I did not say that Russia was like the Reich. They are hardly comparable. What I did say was that the West prediction of Putin about to die (from anal diseases or a coup) was the exact same thing they used against the Reich with about as flimsly of reasonings. There are more examples like this, but admitedly the Reich is first to come to mind. I only meant my post as a way to urge caution. They have been saying Putin's gonna die for ages now (
since 2013 as far as I can tell), and always on flimsy reasonings that have not come true.
I'm sorry if I caused confusion.
