Marketbites: G-7 Sets Price Cap Against Russian Oil
Portfolio Manager Commentary:
After two consecutive positive weeks, stocks fell to start the week amid fears that the Fed will continue tightening until the economy tips into a recession. Tesla shares fell 6.4% following news of an output cut at its Shanghai factory. Meanwhile, stocks like Amazon and Netflix fell 3.3% and 2.4%, respectively, on growth concerns. Lastly, Salesforce fell 7.4% after announcing the departure of Slack's CEO.
“Clearly, equity markets want to move higher, but that’s very dependent on inflation getting under control,” said Peter Essele, senior vice president of investment management and research at Commonwealth Financial Network. “And so, when you have above expectation prints on any econ number that comes out, that tends to fuel inflationary concerns, which sends rates higher.”
Chart of the Day:
The G-7 agreed to cap the price of Russian crude oil at $60 a barrel, moving forward with an unprecedented sanction on one of the world’s largest oil producers months after its invasion of Ukraine. The agreement among Australia and the G-7—Canada, France, Germany, Italy, Japan, the U.K. and the U.S.—came just hours after the European Union united behind the figure. The cap will ban Western companies from insuring, financing or shipping Russian oil unless the oil is sold below $60 a barrel. “With Russia’s economy already contracting and its budget increasingly stretched thin, the price cap will immediately cut into [Russian President Vladimir] Putin’s most important source of revenue,” Treasury Secretary Janet Yellen, the lead architect of the plan, said in a statement.