NEW YORK, May 31 (Reuters) – Global equities markets fell as US Treasury yields rose sharply on Tuesday as investors weighed in on prospects for higher inflation following the ban of Russian oil imports by the European Union which has raised crude oil prices to new highs.
EU leaders agreed in principle to reduce 90% of Russia’s oil imports, the bloc’s harshest sanction so far against Moscow since the Ukrainian invasion in February. Read more
The new sanctions will apply to Russian crude delivered by shipments and will be applied gradually over six months, with refined products implemented for eight months. The embargo exempts oil from Russia as a concession to Hungary.
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Oil prices hit new highs on Tuesday after the EU announcement, with Brent crude rising 0.96% to $ 122.84 a barrel after previously rising to $ 124.64 , its maximum since March 9. read more
August’s Brent crude, however, fell 1.7 percent to $ 115.60 a barrel after members of the Organization of the Petroleum Exporting Countries (OPEC) were considering suspending an agreement. production with Russia.
US West Texas Intermediate (WTI) crude also fell 0.06% to $ 115.02 a barrel, reversing previous trade gains.
“Energy is the cost of inputs basically for everything and high oil prices are bad for inflation,” said Thomas Hayes, a senior member of Great Hill Capital.
The MSCI Global Equity Index (.MIWD00000PUS), which tracks stocks in 50 countries, fell 0.61%. The pan-European STOXX 600 index fell 0.72%.
U.S. Treasury bond yields rose, with most maturities reaching one-week highs as inflation worries dominated trade after eurozone inflation hit an all-time high. this month.
Treasury yields also rose, driven in part by fierce comments from Federal Reserve Governor Christopher Waller on Monday. Waller said he is committed to keeping 50 basis point rate hikes on the table until substantial reductions in inflation are observed, lowering expectations that the Fed could pause to breathe after the June gains. in July. Read more
10-year benchmark yields rose to 2.8622%.
On Wall Street, the three main indices closed lower, driven by the health, technology, energy and industrial sectors. The Dow Jones Industrial Average (.DJI) fell 0.67% to 32,990.12, the S&P 500 (.SPX) lost 0.63% to 4,132.15 and the Nasdaq Composite (.IXIC) fell 0.41% to 12,081.39.
The U.S. dollar generally strengthened on Tuesday as Treasury yields rose and concerns about a further acceleration in global inflation depressed investors’ risk appetite read more
The dollar index, which tracks the dollar against six major currencies, rose 0.345% to 101.770. The euro fell 0.41% to $ 1.0733.
Shelter gold fell 1%, becoming the second consecutive month of falls, pressured by a rise in the dollar and U.S. Treasury yields that affected the attractiveness of the metal despite concerns about the rise of inflation.
Cash gold fell 1.0% to $ 1,837.30 an ounce. U.S. gold futures fell 0.99% to $ 1,833.00 an ounce.
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Report by Chibuike Oguh in New York Edited by Nick Zieminski and Will Dunham
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