How Ukraine attack affects consumers


Associated Press reports



(AP) — Markets shuddered Thursday and whipsawed after Russia’s invasion of Ukraine threatened to push the high inflation squeezing the global economy even higher.

Initially, stocks tumbled as prices surged for oil, wheat and other commodities on worries the conflict would disrupt global supplies. But the moves moderated as the day progressed, particularly after President Joe Biden said he wanted to limit the economic pain for Americans and announced new sanctions that fell short of what some had suggested.

On Wall Street, the S&P 500 tumbled 2.6% at the open of trading before erasing the drop and flipping to a gain of 0.6%. The heaviest losses hit stocks in Europe, after officials called Russia’s nearby moves a “brutal act of war,” with the German DAX down 4%.

Beyond its tragic human toll, the conflict looked set to send prices even higher at gasoline pumps and grocery stores around the world. Russia and Ukraine are major producers not only of energy but also grains and various other commodities.

Oil prices on both sides of the Atlantic briefly jumped above $100 per barrel to their highest levels since 2014. But they gave back much of their gains after Biden said the sanctions package is “specifically designed to allow energy payments to continue.” While he described the sanctions as severe, Ukrainian officials urged the U.S. and West to go further and cut the Russians from a crucial financial payments system.

Afterward, the price of U.S. oil settled at $92.81, up 71 cents for the day, but well below the $100.54 it had touched earlier in the day.

Wholesale prices rose for everything from heating oil to wheat to gasoline. As with stocks, the movements were more sharp in Europe than in the U.S. because its economy is more closely tied to Russia and Ukraine. The spot price in Europe for natural gas jumped more than 50%.

The Fed looks certain to remove the super-low interest rates that investors love, which also helped catapult financial markets and the economy out of their coronavirus-caused plunge. The only question has been how quickly and how aggressively the Fed will move.

The Fed looks certain to remove the super-low interest rates that investors love, which also helped catapult financial markets and the economy out of their coronavirus-caused plunge. The only question has been how quickly and how aggressively the Fed will move.

Russia’s attack on Ukraine and retaliatory sanctions from the West may not portend another global recession. The two countries together account for less than 2% of the world’s gross domestic product. And many regional economies remain in solid shape, having rebounded swiftly from the pandemic recession.

Yet the conflict threatens to inflict severe economic damage on some countries and industries — damage that could mean hardships for millions of people.

Russia is the world’s third-biggest producer of petroleum and is a major exporter of natural gas. Ukraine’s farms feed millions around the world. And financial markets are in a precarious spot as central banks prepare to reverse years of easy-money policies and raise interest rates to fight a resurgence of inflation.

Those higher rates will likely slow spending and raise the risk of another downturn.

Oil prices on both sides of the Atlantic jumped toward or above $100 per barrel to their highest levels since 2014, up more than 6%. Wholesale prices also shot higher for heating oil, wheat and other commodities.

Associated Press reports