Financial markets are trying to price the new reality of where the world is now and where it may be headed in the near future. The specter of reality with more difficult access to food, expensive raw materials, restrictions on many products and massive inflation is emerging.
The main focus seems to be on the raw materials market, in all its forms: from oil, to precious and industrial metals, to grains.
Raw materials and agricultural products with a rise in price
Everywhere you look, a massive boom in commodities is underway. Crude oil rose toward $130 per barrel this morning and to its highest level since 2008. Gold rallied to nearly $2,000 per ounce, its highest level since August 2020. Silver at one point today cost the most since July 2021. Natural gas in the US is also getting more expensive, breaking through the $5 level.
Since the beginning of the year alone, crude oil priced in USD seems to have risen by 67 percent, while wheat seems to have risen even more, gaining almost 68 percent since January 1. The world may be heading towards stagflation with access to food difficult due to the fact that Russia and Ukraine accounted for 30 percent of the world's wheat exports.
Bad time for stock markets
With a huge increase in the risk of stagflation, or even recession, if there were also interruptions in energy supply due to the difficulty of obtaining raw materials (coal or gas), stock market indices may fall more and more sharply.
Already now stock exchanges seem to be under great pressure. Only today in the morning, the German DAX seems to be falling by about 3 percent, to the region of 12700 points. Index contracts in the USA are also under pressure, falling from 1 percent for the DJIA to 1.75 percent for the Nasdaq 100.
Franc more expensive than euro
On the currency market, the EUR/USD fell below 1.09, the Swiss franc appears more expensive than the euro as the 1.00 parity level was breached and the zloty is breaking records of weakness. The euro was due to trade above PLN 4.94 this morning.
Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service)
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