Stocks edge lower and crude gains after revolt in Russia

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Global stock markets edged lower on Monday, while oil prices climbed slightly, as investors digested the shortlived armed uprising in Russia over the weekend.

Wall Street’s benchmark S&P 500 slipped 0.1 per cent at the opening bell, while the tech-focused Nasdaq Composite gave up 1 per cent. The moves echoed small declines in Asia and Europe, where a sell-off in the defence sector dragged down broader markets. The region-wide Stoxx 600 was 0.2 per cent lower.

The declines extended the trend from Friday last week when the FTSE All-World index registered its worst weekly performance since March, as investors grew concerned that the extensive monetary tightening of central banks around the world could lead to recessions.

US Federal Reserve chair Jay Powell last week signalled that two more quarter-point rate increases were likely by the end of 2023, weighing on Wall Street’s blue-chip indices.

Meanwhile, the price of crude oil swung between gains and losses after Russian warlord Yevgeny Prigozhin and his Wagner paramilitary forces attempted to revolt against the country’s leader Vladimir Putin over the weekend. Brent crude, the international benchmark, was up 0.6 per cent to $74.29 mid-afternoon in London, having traded at $74.80 earlier in the day. The US marker West Texas Intermediate added 0.3 per cent to $69.36 a barrel.

Traders said the shortlived mutiny raised serious questions over the outlook for Putin’s regime, but the immediate impact on crude output from one of the world’s top suppliers remained uncertain.

“There’s a possibility of supply disruption any time you get a serious geopolitical event in a major oil supplier,” said Stephen Innes, managing partner at SPI Asset Management. “It opens up a can of worms and we’re going to have to see how that plays out.”

Gold also notched gains, rising 0.4 per cent to $1,928.99 a troy ounce as investors turned to haven assets. In Moscow, the rouble pared some losses after sliding to a 15-month low against the dollar earlier in the day.

In Europe, London’s FTSE 100 lost 0.1 per cent while Germany’s Dax dropped 0.2 per cent after a closely watched survey showed that business confidence in Europe’s largest economy declined for the second successive month in June.

Falls in the region were driven in part by a sharp sell-off in European defence groups, with shares in Milan-listed Leonardo and Sweden’s Saab giving up roughly 4 per cent, while Germany’s Rheinmetall lost 3 per cent.

Turkish bank shares rallied to a six-month high after the central bank loosened regulations aimed at keeping customers from holding dollar deposits.

The Bist Banks index climbed as much as 3.2 per cent, reaching its highest level since December 2022. The move comes after the central bank on Sunday reduced the amount of Turkish lira-denominated assets that lenders need to hold against foreign currency deposits. The lira weakened 2.8 per cent to a record low of 26.05 against the dollar.

Equity markets in Asia were lower on Monday, with Japan’s Topix down 0.2 per cent, Hong Kong’s dropping 0.5 per cent and China’s CSI 300 shedding 1.4 per cent.

Australia’s S&P/ASX 200 index fell 0.3 per cent after analysts at Goldman Sachs downgraded the country’s equities to underweight because of dimming prospects for Chinese economic growth.

In currency markets, China’s renminbi dropped as much as 0.8 per cent to a seven-month low before ticking up slightly to 7.233 against the dollar, as the country’s markets returned from a long holiday and concerns grew over domestic economic growth.