The price of oil fell more than 8 percent and a barrel of US crude fell below $95 after the week started above USD 109.
Stocks ticked higher on Wall Street on Tuesday as inflation concerns ease somewhat and oil prices fall sharply for the second day.
The S&P 500 was 0.7 percent higher at the start of trading, after a report showed that the rapid acceleration in inflation took a pause at the wholesale level last month. The Dow Jones Industrial Average rose 166 points, or 0.5 percent, to 33,111, as of 10:10 a.m. Eastern Time, and the Nasdaq composite was up 1 percent.
The wilder move has been in oil and Asian stock markets, where tightened anti-COVID measures in China raise concerns about energy demand and disruptions to manufacturing and global trade. Oil prices fell more than 8 percent and a barrel of US crude fell below $95 after the week started above $109. Shares in Hong Kong fell more than 5 percent for the second day in a row after the neighboring city of Shenzhen was ordered into a shutdown.
The renewed concerns about COVID-19 come on top of an already long list of concerns for markets, which have seen wild hour-to-hour swings in recent weeks. The war in Ukraine has skyrocketed prices for oil, wheat and other commodities, of which the region is a major producer. This increases the threat that already high inflation will continue and be combined with a potentially stagnant economy.
Central banks around the world, meanwhile, are preparing to pull the plug on the support they gave to the global economy after the pandemic hit. The Federal Reserve begins a two-day meeting on interest rates and is widely expected to announce a 0.25 percentage point increase in its key short-term interest rate on Wednesday.
That would be the first hike since 2018 and likely the first in a series of rate hikes. The Fed is trying to slow the economy down enough to contain the high inflation sweeping the country, but not so much as to trigger a recession.
Inflation is already at its highest level in generations, and the most recent figures don’t even include the surge in oil prices that happened after Russia invaded Ukraine.
Data released Tuesday showed that inflation was still very high at the wholesale level last month, but at least not accelerating. Producer prices were 10 percent higher in February than a year earlier, keeping inflation stable year on year. On a monthly basis, inflation rose 0.8 percent in February compared to January, compared to forecasts of 0.9 percent.
That is a slowdown from month-on-month inflation of 1.2 percent in January.
So the numbers are still very high and will keep the Fed on track to hike rates Wednesday, economists said, but at least they weren’t worse than expected.
Treasury yields fell immediately after the report. The yield on 10-year government bonds fell from 2.14 percent at the end of Monday to 2.08 percent.
The two-year yield, which depends more on expectations for policy changes from the Fed, fell from 1.87 percent to 1.80 percent.
Falling oil prices also helped push interest rates down. A barrel of US crude fell 8.2 percent to $94.56. It had briefly hit $130 last week, when concerns over supply disruptions caused by the war in Ukraine were at their peak. Brent oil, the international standard, fell 7.2 percent to $99.25 a barrel.
A reprieve in fuel prices helped a wide range of stocks, and the majority of companies in the S&P 500 rose. Delta Air Lines helped lead the way after a 7.6 percent increase. It raised its forecast for revenue this quarter. United Airlines climbed 7.5 percent after it said revenue this quarter would be near the better end of its forecasted margin.
European indices fell slightly on foreign equity markets. Shares in Shanghai fell 5 percent and the Hang Seng in Hong Kong lost 5.7 percent, despite the release of data on sharp increases in Chinese retail sales, industrial production and investment in January-February. It followed a decision by the Chinese central bank not to cut interest rates to boost economic growth.
Shares in Hong Kong have plunged to a nearly six-year low after the neighboring city of Shenzhen was ordered to close to fight China’s worst COVID-19 outbreak in two years.
“Fears continue to drive equity markets that lockdowns could spread, seriously impacting China’s growth,” Oanda’s Jeffrey Halley said in a commentary.
In other developments, the London Metal Exchange said nickel trading will resume on Wednesday, just over a week after it was suspended as the price of the metal rocketed to more than $100,000 a tonne.
The announcement followed a message from Tsingshan Holding Group, a Chinese metals giant, that it had struck a deal with its creditors on a “standstill arrangement” so that the banks would not make margin calls or close their positions against the company as long as the company continues to operate. resolving its nickel margin and settlement requirements.
Russia is the world’s number 3 producer of nickel. Its price, and that of many other commodities, has soared amid speculation about potential supply disruptions, as Russia struggles to extend economic sanctions following its invasion of Ukraine.
This post Shares soar on Wall Street after oil prices plummet again was original published at “https://www.financialexpress.com/market/stocks-rise-on-wall-street-after-oil-prices-tumble-again/2462162/”