Equity markets plunged Monday, while

oil prices soared to a near 14-year high and safe-haven gold broke $2,000 as
investors grew increasingly fearful about the impact of the Ukraine war on
the global economy.

Trading floors were a sea of red in early exchanges with experts warning of
a period of stagflation with the spike in crude likely to light a fire under
already high inflation.

The commodity at one point rocketed almost 18 percent to $139.13 — a level
not seen since mid-2008 — after US Secretary of State Antony Blinken said
the White House and allies were in talks about banning imports from Russia.

With the country the third-biggest producer of oil, such a move would
compound a supply crisis just as demand takes off. Other commodities sourced
from the region such as wheat and metals were also sharply higher.

And Mike Muller of Vitol warned of further pain.

“We have plenty of twists and turns to come,” he told a podcast produced by
Dubai-based consultant and publisher Gulf Intelligence.

“While I think the world is already pricing in the fact there’ll be an
inability to take in a serious amount of Russian oil in the western
hemisphere, I don’t think we’ve priced in everything yet.”

World governments had until now not included Russian oil in their wide-
ranging sanctions on Moscow owing to concerns about the impact on prices and
consumers, though trade has become increasingly tough as banks pull financing
and shipping costs rise.

The surge in crude is giving central banks a headache as they start to
tighten pandemic-era monetary policy to fight inflation, which is already at
a 40-year high in the United States.

The International Monetary Fund warned at the weekend that the war and
sanctions on Russia will have a “severe impact” on the global economy.

National Australia Bank’s Tapas Strickland said: “Global growth fears
abound given the surge in commodity prices, with ‘stagflation’ again rearing
its head in what must be akin to a horror movie for a central bank.

“A key question for markets is how do central banks respond to higher
inflation and the possibility of slower growth ahead.”

Concerns about the impact on the global economy have rattled through
markets, with European equities particularly badly hit owing to the
continent’s reliance on Russian energy. The euro remained wedged below $1.10
for the first time since mid-2020.

On Monday, Asian bourses were deep in the red, with Hong Kong at one point
losing more than four percent, while Tokyo and Taipei were off more than
three percent.

Seoul and Manila were both down more than two percent, with Shanghai,
Sydney and Wellington off more than one percent. There were also steep losses
in Singapore and Jakarta. US futures were sharply lower.

The panic on trading floors sent safe havens sharply higher, with gold — a
key go-to in times of crisis and turmoil — hitting as much as $2,000.86, its
highest since mid-2020.

The dollar was also well up against most other currencies, while Treasuries
continued to rally.

– Key figures around 0230 GMT –

Brent North Sea crude: UP 8.4 percent at $128.02 per barrel

West Texas Intermediate: UP 7.4 percent at $124.24 per barrel

Tokyo – Nikkei 225: DOWN 3.2 percent at 25,166.23 (break)

Hong Kong – Hang Seng Index: DOWN 3.5 percent at 21,137.01

Shanghai – Composite: DOWN 1.1 percent at 3,409.48

Dollar/yen: UP at 114.90 yen from 114.78 yen late Friday

Euro/dollar: DOWN at $1.0850 from $1.0916

Pound/dollar: DOWN at $1.3200 from $1.3248

Euro/pound: DOWN 82.18 pence from 82.60 pence

New York – Dow: DOWN 0.5 percent at 33,614.80 (close)

London – FTSE 100: DOWN 3.5 percent at 6,987.14 (close)