Stock Market Weekly Wrap-up
Micah Shin, Senior Correspondent, US
12.00am, 12th March 2022
Last week, President Biden announced that the United States would ban Russian energy imports. As a result, the price of oil and other commodities surged, and the average prices of gas in the U.S. reached record highs.
Oil barrels are pictured at the site of Canadian group Vermilion Energy in Parentis-en-Born, France, October 13, 2017. REUTERS/RegisDuvignau/Files
In California, gasoline prices experienced a high, upwards of nearly seven dollars per gallon. The increase in prices results in even higher inflation for U.S. citizens. According to the Bureau of Labor Statistics, the index of consumer inflation for the month of February experienced a 40-year high. The index was at nearly 8% year-over-year. The index was affected by inflation, in addition to higher prices for food, energy, shelter, and rent. This Tuesday, the Federal Open Market Committee will meet, and the Federal Reserve is expected to increase interest rates. Chairman Jerome Powell explained that the central bank will track the effects of developments in Ukraine. One can expect producer inflation figures, data from retail sales, and updates on the nation’s housing market. The decision to impose sanctions on Russia will come with consequences: increased price pressures, rising inflation, and the possibility of an economic downturn with rapidly raised rates. This Wednesday, the U.S. Census Bureau will release its retail sales report for the month of February.
2. It is expected that the report will entail a dramatic decline in sales growth, as consumers cut back on purchases as a response to increased prices. On Friday, the Consumer Sentiment Index was reported at its lowest level since 2011. Oil prices experienced a dramatic increase. West Texas Intermediate crude oil averaged $92 last month; this month, the average price is $112. CPI inflation is expected to rise due to the upward pressure from increased oil prices.
iStock image by gesrey
These oil prices are not just the result of inflation, but also due to the geopolitical turmoil between Russia and Ukraine. Globally, inflationary pressures have increased, gas and oil prices have surged, wheat and grain prices rose, and supply chains, especially in base-metal commodities, have been disrupted. The outcome of the war is uncertain; however, energy, commodity, and food prices are expected to rapidly reverse if de-escalation occurs in this month. Despite the economic implications of the Russia-Ukraine conflict, inflation will likely ease if energy and commodity prices decrease, the global supply chain is improved, and more labor supply returns to work. All three indices all fell last week, and the prices of bonds and stocks fell last Thursday.
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