The war in Ukraine continues to influence the markets as the realisation dawns that Putin is digging his heels in, peace talks are failing and sanctions are likely to drag on.
Along with its stranglehold on oil and gas, Russia is a major producer of nickel, copper and aluminium, and commodities prices are likely to remain high for the duration of the war. Aluminium prices rose 3.5% on supply concerns, while nickel rose by 3.7%.
The commodities-rich ASX is set to open higher on the back of this news and ASX futures were up 10 points to 7,494 this morning. In the US, shares were flat in afternoon trading as hopes for a negotiated cease-fire faded, with the NASDAQ, the DOW and the S&P 500 all fractionally down.
Europe reckons with stagflation
In Europe, things are more dire. Russian-energy-dependent Germany is staring down the barrel of a recession and inflation levels not seen since reunification in the early 1990s, while in Spain, inflation has surged by close to 10% - the most in nearly four decades.
The longer the war continues, the greater the risk of stagflation for the leading economies on the continent, as food and fuel prices continue to rise.
Budget fallout
Back home, the Budget fallout continues with the ALP accusing the Morrison Government of throwing a grenade to a future government when the six-month fuel excise cut expires and the new prime minister has to deliver that unfortunate news.
The ABC reports this morning that criminals are using drones to steal diesel from farms and businesses as fuel prices bite in regional areas. The excise reduction has been welcomed in these communities, but it is seen as a band-aid solution to an issue that isn’t going away.
Economists believe that the Budget will fuel interest rate rises – these were always on the cards, but tax cuts, one-off handouts, the excise reduction and a $17 billion discretionary spend are likely to bring them ever closer.
“From the RBA’s point of view, we think the additional near-term support for households is likely to have marginally hawkish implications for rates,” Goldman Sachs (NYSE:GS) economist Andrew Boak told the Australian Financial Review.
A Senate committee has called for wage theft laws to combat the thorny problem, which has caught out big names like Woolworths, Coles, the NAB and Qantas. Underpayment and unpaid superannuation, particularly rife in low-paid and casualised sectors, contribute to a $6 billion collective hole in wages each year.
Qantas targets net-zero
Qantas has released its net-zero road map to 2050, with an interim target of 25% reduction on 2019 carbon emission levels by 2030.
A sustainable aviation biofuel, to be phased in between 2030 and 2050, underpins the plan.
Speaking of fuel, global oil prices rose by around 3% on Wednesday ahead of today’s OPEC+ meeting. US crude stockpiles fell by 3.4 million barrels last week to 410 million barrels, the lowest supply since September 2018, according to government data. Accordingly, the Brent crude price rose by US$3.22 a barrel or 2.9% to US$113.45 a barrel.
The gold futures price rose by 1.1% to US$1,939 an ounce and spot gold was trading near US$1,935 an ounce at the US close. Iron ore futures were also up by 0.4% to US$150.88 a tonne.