The war in Ukraine continues to influence the markets as we realize that Putin is stubborn, that the peace talks are failing and that the sanctions are likely to drag on.
Along with its stranglehold on oil and gas, Russia is a major producer of nickel, copper and aluminum, and commodity prices are expected to remain high for the duration of the war. Aluminum prices rose 3.5% due to supply issues, while nickel rose 3.7%.
The commodity-heavy ASX is expected to open higher on the news and ASX futures rose 10 points to 7,494 this morning. In the United States, stocks were flat in afternoon trading as hopes of a negotiated ceasefire faded, with the NASDAQ, DOW and S&P 500 all down slightly.
Europe is counting on stagflation
In Europe, things are more serious. Germany, dependent on Russian energy, is struggling with a recession and inflation levels not seen since reunification in the early 1990s, while in Spain inflation has jumped by almost 10% – the most in nearly four decades.
The longer the war drags on, the greater the risk of stagflation for the continent’s major economies, as food and fuel prices continue to rise.
Back home, the budget fallout continues, with the PLA accusing the Morrison government of throwing a grenade at a future government when the six-month fuel excise cut expires and the new PM is due to announce this unfortunate news.
The ABC reports this morning that criminals are using drones to steal diesel from farms and businesses as fuel prices bite in the regions. The excise reduction has been welcomed in these communities, but is seen as a band-aid solution to a problem that is not going away.
Economists believe the budget will fuel interest rate hikes – they’ve always been expected, but tax cuts, one-off aid, excise duty cuts and a $17 billion discretionary spending are likely to bring them even closer.
“From the RBA’s perspective, we think the additional near-term support for households is likely to have mildly hawkish implications for rates,” Goldman Sachs (NYSE:GS) economist Andrew Boak told Reuters. Australian Financial Review.
A Senate committee has called for wage theft laws to tackle the thorny problem, which has caught up with big names like Woolworths, Coles, NAB and Qantas. Underpayments and unpaid pensions, particularly prevalent in low-wage and precarious sectors, contribute to a collective $6 billion hole in wages each year.
Qantas aims for net zero
Qantas has released its net zero roadmap to 2050, with an interim target of reducing 2019 carbon emissions levels by 25% by 2030.
A sustainable aviation biofuel, to be phased in between 2030 and 2050, underpins the plan.
Speaking of fuel, global oil prices rose around 3% on Wednesday ahead of today’s OPEC+ meeting. U.S. crude inventories fell 3.4 million barrels last week to 410 million barrels, the lowest supply since September 2018, government data showed. Thus, the price of Brent rose by US$3.22 per barrel or 2.9% to reach US$113.45 per barrel.
Gold futures rose 1.1% to US$1,939 per ounce and spot gold was trading near US$1,935 per ounce at the US close . Iron ore futures also rose 0.4% to settle at US$150.88 a tonne.