US stocks fall as higher oil price adds to inflation fears
US stocks fell on Monday after finishing last week with their worst performance since February as a rally in oil prices heightened concerns about inflation and future interest rate developments.
Wall Street’s blue chip S&P 500 index fell 1.5% during morning trading in New York. The technology-focused Nasdaq Composite, home to companies whose high valuations may make their stock prices more sensitive to anticipated changes in interest rates, fell 2.4%.
“We are in an environment that looks like the opposite of Goldilocks,” said Cosimo Marasciulo, head of absolute investment returns at fund manager Amundi, referring to an economic environment where growth is healthy but l inflation is contained. “We could be under upward pressure on inflation and on interest rates.”
In Europe, the Stoxx 600 index plunged 0.4 percent at the close of trading after falling 2 percent last week. Hong Kong’s Hang Seng Index closed the day down 2.2%.
These stock moves came as Brent crude oil jumped 3.1% to a three-year high of $ 81.74 a barrel, with producer group Opec + sticking to existing production plans during its last meeting, despite soaring natural gas prices increasing demand for oil. Members agreed this summer to add 400,000 barrels of production per day each month until the end of next year.
West Texas Intermediate, the US oil benchmark, hit $ 78 per barrel, its highest level since 2014.
The yield on the benchmark 10-year US Treasury note, which was suppressed by massive purchases of government debt securities by a Federal Reserve keen to cut borrowing costs during the pandemic, rose 0.04 percentage points. percentage at 1.505%.
This yield, which moves inversely to the price of the ticket, fell from around 1.3% at the end of September, with prolonged inflation and improvements in the labor market fueling expectations of the Fed reducing its stimulus plan by 120. billion dollars per month.
U.S. economic output is expected to moderate after a rebound triggered by the coronavirus vaccine in the early months of the year. Investors, meanwhile, were gripped by the prospect of economic stagflation amid high energy prices and severe supply chain disruptions caused by pandemic restrictions and labor shortages. ‘artwork.
Fed Chairman Jay Powell has signaled that the central bank will announce plans to cut monthly bond purchases in November after seeing progress in the labor market.
The next report on non-farm wages in the United States, due on Friday, would “probably be the catalyst to cement the November drop,” said Jim Reid, Deutsche Bank strategist. Analysts polled by Bloomberg expect U.S. employers to hire nearly half a million new workers last month.
The dollar index, which measures the US currency against six others, fell 0.3% after hitting a one-year high last week. The British pound added 0.4% to $ 1.3602.
The New Zealand dollar gained 0.4% against its US counterpart at $ 0.697. The Reserve Bank of New Zealand, which will hold its next monetary policy meeting on October 6, is expected to increase borrowing costs by a quarter of a percentage point to fight rising inflation.
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