Commodities soar with war, more expensive car insurance and what matters in the market

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Commodities rise along with tensions in Ukraine

The advance of the Russian offensive in Ukraine once again set the tone in the markets this Wednesday (2) and boosted the rise of commodities.

The barrel of Brent oil appreciated 8%for $113 (R$ 584), the highest level since June 2014.

What explains: the prices of several basic agricultural and metallic materials have soared along with the worsening of the crisis in Eastern Europe. The decision by OPEC and allies – including Russia – not to increase the pace of increase in oil supply also put pressure on prices.

Russia is a major producer of oil and natural gas and, together with Ukraine, has an important share in the global supply of wheat – the grain that has soared the most – and corn. Sanctions and company decisions to avoid the region have put pressure on prices.

In the Bags: in the first trading session after the holiday, the Ibovespa closed higher 1.80%, at 115,173 points, leveraged by commodities. Vale and Petrobras, the two companies with the highest weight in the index, rose 7.99% and 1.97%respectively.

• Other oil companies, such as 3R Petroleum (12.93%) and PetroRio (9.02%), advanced even further.
• The day was also positive in the US, where Fed Chair Jerome Powell indicated that he will support an increase in 0.25 pp.(percentage point) in the interest rate – the market predicted a 0.5 pp advance before the war.
• The dollar retreated 0.91%, the BRL 5.11, with foreigners eyeing the appreciation of commodities. The appreciation of the real may offset, at least in part, the effect of higher food prices on inflation.

Consequences: with the surge in oil prices, the market already sees a large gap between international prices and those practiced by Petrobras. The state-owned company, however, has not yet made a decision on the readjustments, says President Joaquim Silva e Luna.

War and Crypto

After imposing several sanctions on Russian President Vladimir Putin and allied billionaires, Western countries now want to be sure that they are enforced.

To do this, they want to prevent targets from being able to evade punishments through cryptocurrencies.

Understand: as digital currencies work on a decentralized network, without having a regulator, it is not possible to prevent their transaction. Since the sanctions package, the purchase of crypto in rubles has skyrocketed.

The transactions were not necessarily carried out by sanctions targets, and may have been an attempt by Russian citizens to protect their wealth at a time when the ruble is melting.

What to do? To prevent punished people from transferring their assets to cryptocurrencies, the European Union and the G7 are considering asking platforms to limit access to certain users.

Default? With the punishments imposed on the Russian financial system, such as those that froze central bank assets, foreign investors fear that the country will be unable to honor its dollar-denominated debts for the first time in history.

The distress escalated on Wednesday when the Russian authority stopped paying ruble bond coupons, leaving investors stranded with the assets.

salty insurance

As with new and used vehicles and spare parts, car insurance has also become more expensive during the pandemic.

What explains: the automobile industry was hit hard with the breakdown of production chains that arose as a result of the health crisis.

• Parts – mainly semiconductor chips – became scarce and more expensive, which delayed the delivery of new cars and ended up shifting demand to used ones, which appreciated in value.
• The lack of inputs continues to affect the industry this year and led the factories of Caoa Chery and Mercedes Benz to temporarily stop production.
• As the price of insurance is proportional to the value of the vehicle, the values ​​of the policies also rose.

In numbers: sector revenue followed the rise and reached BRL 38.4 billion in 2021, an increase of 8.8% compared to 2020, according to data from Fenseg (National Federation of General Insurance).

Disruption: The sheet showed last year how insurtechs (insurance startups) want to offer services at lower costs and increase competitiveness in the sector. For this, they are inspired by the transformation that fintechs have generated in the financial system.

One of the novelties is the “on and off” insurance model, whose hiring grew in the pandemic.

More about cars:

In yet another negative result for the automotive sector, 129,300 light and heavy vehicles were registered in February, a drop of 22.8% compared to the same month in 2021.

Oligarchs’ yachts ‘evade’ sanctions

At least five Russian billionaires’ yachts were seen moored or sailing on Wednesday in the Maldives, vessel tracking data showed. The Indian Ocean island nation has no extradition treaty with the US.

What explains: the vessels arrived in the archipelago after the US government said it would deploy a task force to confiscate properties from sanctioned Russian oligarchs.

Who are the oligarchs? this is the term used today to refer to a group of extremely wealthy Russians who rose to prominence after the fall of the Soviet Union in 1991.

Perhaps the best known of these is Roman Abramovich, with an estimated patrimony of $14.3 billion (R$ 73 billion). On Wednesday, the billionaire put Chelsea, the English club he bought in 2003, up for sale.

other billionaires Russians linked to Putin:

• Vladimir Potanin, entrepreneur in the mining sector, is considered the richest in Russia, with an estimated fortune of $27.9 billion (R$ 143 billion).
• Boris and Arkady Rotenberg, called ‘Putin’s comrades’ by the British press. Boris attended the same judo club as Putin as a child.
• Mikhail Fridman, founder of Alfa Group. His bank, Alfa-Bank, is one of those punished by Western countries.
• See here the names of some sanctioned oligarchs.

More about the war: