NEW YORK — Oil prices surged above $110 per barrel Wednesday as Russian forces stepped up attacks on Ukrainian cities, while premarket trading on Wall Street pointed toward a higher open.
Investors appeared to take in stride Federal Reserve Chair Jerome Powell’s comments Wednesday that the Fed will begin raising interest rates this month in a high-stakes effort to restrain surging inflation.
In prepared testimony he will deliver to a congressional committee, Powell cautions that the financial consequences of Russia’s invasion of Ukraine are “highly uncertain” and that the Fed will “need to be nimble” in responding to unexpected changes resulting from the war or the sanctions that the United States and Europe have imposed in response.
On Wall Street, the futures for the benchmark S&P 500 index rose 0.2% while the same for the Dow Jones Industrial Average climbed about 0.3%.
Markets in Shanghai and Tokyo declined as President Vladimir Putin’s invasion fed fears of global economic turmoil. Stocks turned higher in Paris and London.
The war is adding to worries about global economic growth as the Federal Reserve and other central banks gear up to fight surging inflation by raising interest rates.
“The conspiracy of geopolitical uncertainty and stagflation-type impulses is a brutal shock,” Tan Boon Heng of Mizuho Bank said in a report.
Investors were waiting for more clues about possible rate hikes when Fed Chair Jerome Powell speaks before Congress starting at 10 a.m.
The DAX in Frankfurt fell 0.4% and the CAC 40 in Paris gained 0.2%. The FTSE 100 in London added 0.4%.
Russia’s central bank said stock trading on the Moscow exchange would remain closed Wednesday for a third day, though trading of currencies and precious metals would resume for the first time this week.
The value of Russia’s ruble fell further to less than 0.9 U.S. cents despite its central bank’s decision Monday to raise interest rates to defend the currency.
Oil prices rose despite an agreement by the United States and other major governments in the International Energy Agency to release 60 million barrels from strategic reserves to stabilize supply.
Benchmark U.S. crude jumped another $7.75 to $111.16 per barrel in electronic trading on the New York Mercantile Exchange after earlier rising as high as $111.50.
Brent crude, the international price standard, gained $7.77 to $112.74 per barrel in London. It soared $7 the previous session to $104.97.
“Markets dismissed the notion that 60 million barrels of strategic reserves released will be consequential to the risks of Russian supply jeopardized,” said Tan of Mizuho. “Russia pumps more than that in just six days.”
Late Tuesday, President Joe Biden announced he was joining U.S. allies in closing the country’s air space to Russian aircraft.
In an annual State of the Union speech, Biden said he would try to cushion Americans against the impact of higher oil prices. “I will use every tool at our disposal to protect American businesses and consumers,” Biden said.
On Wall Street, the Dow Jones Industrial Average lost 1.8% on Tuesday. The Nasdaq composite slid 1.6%.
In Asia, the Nikkei 225 in Tokyo lost 1.7% to 26,393.03 and the Shanghai Composite Index shed 0.1% to 3,484.19. India’s Sensex gave up 2.1%.
The Hang Seng in Hong Kong sank 1.9% to 22,334.14. In Seoul, the Kospi gained 0.5% to 2,712.97.
Sydney’s S&P-ASX 200 added 0.3% to 7,116.70 after government data showed Australia’s economy grew by 3.4% in the final three months of 2021 over the previous quarter and consumer spending was strong.
Economists say Asian economies are less exposed to the war than Europe but those that need imported oil will be hit by rising global prices, adding to inflationary pressures and depressing business and consumer activity.
Moscow’s attack on Ukraine and Russian threats of retaliation in response to Western sanctions also have roiled global markets for wheat and other commodities.
Prices of wheat, of which both Russia and Ukraine are important exporters, have risen more than 20% over one month ago.
Investors shifted money into the safe haven of government bonds, pushing up their market price and narrowing the yield, or the difference between the current price and the payout at maturity.
The yield on the 10-year Treasury rose to 1.78% after falling Tuesday by an unusually wide margin from Monday’s 1.83%.
The dollar gained to 115.39 yen from Tuesday’s 114.86 yen. The euro declined to $1.1094 from $1.1123.