Global stocks and U.S. stock futures slipped on Tuesday as the Russia-Ukraine conflict continues. Those ongoing issues have caused Goldman Sachs to raise its commodities forecast, citing supply chain disruptions and a very high inflation path. “The recent escalation with Russia create clear stagflationary risks to the broader economy, driven by higher energy prices, which reinforce our conviction in higher gold prices in coming months and our $2,150/toz (troy ounce) price target,” the company said. “A very high inflation path in 2022 should make an easy case for steady rate hikes at all seven remaining” Federal Reserve meetings in 2022, Goldman Sachs economist David Mericle said in another note to clients.
CNBC/Jesse Pound and Maggie Fitzgerald
Stocks fall on first day of March as Russia bears down on Ukraine capital, oil hits 7-year high
U.S. stock futures pointed to a rough start to March for the equity market as oil prices surged and investors continue to monitor the fighting between Russia and Ukraine.
Dow futures dropped 125 points or 0.4%. S&P 500 futures were off 0.3% and Nasdaq 100 futures slipped 0.4%.
The decline in index futures came as satellite cameras captured a convoy of Russian military vehicles apparently on its way to Kyiv, the Ukrainian capital.
The continued aggression from Russia pushed energy prices higher. West Texas Intermediate crude futures jumped 5% on Tuesday morning, breaking above $101 per barrel and hitting its highest level in seven years.
Wheat prices also surged on Tuesday. The rise in commodity prices added to inflation fears in the U.S. and Europe.
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Kitco News/Anna Golubova
Gold price to hit $2,150 on Russian invasion, ‘very high inflation path’ – Goldman Sachs
As the West steps up sanctions against Russia in the aftermath of a full-scale invasion of Ukraine, Goldman Sachs raised its commodities price forecasts, citing supply disruptions and an even more problematic inflation outlook.
The commodities to pay close attention to are the ones Russia is a major producer of — oil, gas, aluminum, palladium, nickel, wheat and corn.
“The range of near-term price outcomes for commodities has become extreme, given the concern of further military escalation, energy sanctions or potential for a cease-fire,” Goldman said in a note to clients on Sunday. “We expect the price of consumed commodities that Russia is a key producer of to rally from here.”
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Market Insider/Shalini Nagarajan
Global stocks slip in cautious trade after Russia-Ukraine talks fail to halt hostilities, as oil rises on supply worries
Global stocks made cautious moves Tuesday as investors regained some composure on the back of Russia and Ukraine agreeing to keep peace talks on the table.
The first round of talks aimed at ending the fighting between Russia and its neighbor ended with no agreement Monday, but another round is set to take place in the coming days on the Polish-Belarusian border.
Futures on the Dow Jones fell 0.5% as of 5:20 a.m. ET, while those on the S&P 500 dropped 0.6%, and Nasdaq futures lost 0.8%, suggesting a lower start to trading later in the day.
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