Oil prices jump, stocks mixed with spotlight on surging inflation

LONDON - Oil prices rallied Wednesday, adding to soaring inflation concerns, while stock markets diverged.

Crude futures jumped 2.5 percent with Brent North Sea headed towards $120 per barrel.

Russian Deputy Prime Minister Alexander Novak on Wednesday warned that a ban on Russian oil and gas imports over the Ukraine war would drive the world's energy markets to a "collapse". 

"It is absolutely obvious that without Russian hydrocarbons, if sanctions are introduced, there will be a collapse of the oil and gas markets," Novak told Russia's lower house State Duma as reported by Russian news agencies.

"The rise in energy prices may be unpredictable," Novak added. 

On stock markets, London's benchmark FTSE 100 index was up after official data showed UK annual inflation had surged to 6.2 percent last month, the highest level in 30 years. 

While inflation increases company costs it can boost their revenues by sizeable amounts. 

The British data were published ahead of a UK budget update Wednesday that could ease a cost-of-living crisis for millions of Britons as inflation rockets worldwide largely owing to soaring energy prices. 

"Today's data confirm a worsening squeeze on consumer incomes," said Yael Selfin, chief economist at KPMG UK.

"These price rises were dominated by increases in energy, and we expect further rises this year as global energy, food, and other commodities markets are impacted by Russia's invasion of Ukraine."

Elsewhere, eurozone stock markets fell Wednesday after Asia's top indices closed higher.

Wall Street had rallied Tuesday on optimism that the Federal Reserve's plan to hike interest rates would help to bring inflation under control.

While there remains plenty of concern about the war in Ukraine, analysts said some confidence had seeped back into trading floors as investors bet on consumer resilience and economies continue to reopen.

Federal Reserve boss Jerome Powell this week said that the US central bank was prepared to act more aggressively on lifting borrowing costs should American inflation -- already at a 40-year high -- not fall quickly enough.

Officials lifted US rates last week by a quarter of a point but some have advocated bigger increases, a view Powell suggested he was open to believing that the world's biggest economy was strong enough to withstand such a move.

Agence France-Presse

Russia sanctions ripple across world markets, rouble tanks

LONDON - World stocks slid, oil prices jumped and the rouble tanked to fresh record lows on Monday, as the West ramped up sanctions against Russia for its attack on Ukraine that included blocking banks from the SWIFT global payments system.

Russia's central bank raised its key interest rate to 20 percent from 9.5 percent in an emergency move, and authorities told export-focused companies to be ready to sell foreign currency as the rouble slid almost 30 percent to record lows versus the dollar. 

As an economic crisis loomed in Russia, the fallout of tougher sanctions from the West imposed over the weekend rippled out across financial markets.

European stocks slumped 2 percent. European banks most exposed to Russia, including Austria's Raiffeisen Bank, UniCredit and Societe Generale, dropped between 9 and 15 percent, while the wider euro zone banking index fell 7 percent.

US stock futures were deep in negative territory, although MSCI's broad gauge of Asia shares and Japan's Nikkei eked out small gains.

"The trading environment is highly dynamic, and we maintain a defensive stance as things could get a lot worse from here," said Peter Garnry, head of equity strategy at Saxo Bank.

Oil prices meanwhile surged after Russian President Vladimir Putin put nuclear-armed forces on high alert on Sunday, the fourth day of the biggest assault on a European state since World War Two. 

The ramp-up in tensions heightened fears that oil supplies from the world's second-largest producer could be disrupted, sending Brent crude futures up 5 percent to $102.86. US. West Texas Intermediate crude futures were up $4.62 or almost 5.0 percent at $96.24 a barrel.

"I am telling clients all we know for certain is that energy prices are going to be higher, and there are going to be some beneficiaries," said John Milroy, Ord Minnett financial advisor in Sydney.

"It's an old cliché, but it's true that uncertainty drives moves in both directions." 

SAFE-HAVENS SHINE

As uncertainty continued to grip markets, investors plumped for the safety of the dollar, Swiss franc and Japanese yen.

The euro slid 1 percent to $1.1168 and 0.9 percent to 129.08 yen, while the risk-sensitive Australian and New Zealand dollars fell 0.5 percent and 0.3 percent, respectively.

Sovereign bonds such as the US. Treasuries and German Bunds -- regarded as among the most safest assets to hold globally -- remained in strong demand.

The 10-year US. Treasury yield was down around 7 basis points to 1.90 percent in London trade, and equivalent German yields were down 6 basis points to 0.16 percent.

Money markets continued to push back rate hike expectations with investors now pricing roughly 30 basis points worth of tightening from the European Central Bank in total this year, down from 35 bps late last week. 

Gold was last up 0.61 percent to around $1,899.

Russia's rouble dived almost 30 percent to a record-low 120 per dollar, but recovered some ground to last trade at just over 100 to the dollar.

MSCI's Russia equity index slid 25 percent, while London and Frankfurt-listed Russian equity exchange traded funds (ETFs) tanked more than 35 percent as investors dumped Russian assets.

(Reporting by Dhara Ranasinghe; Additional reporting by Kevin Buckland in TOKYO; editing by Jason Neely)

-reuters

Equity markets and oil bounce back after last week's tumble

HONG KONG - Stocks and oil rallied Monday on bargain-buying after last week's blow-out, with traders tracking a healthy Wall Street performance fuelled by comments from a top Federal Reserve official that the spread of the Delta variant could cause him to reconsider plans to taper monetary policy.

Fears about the Covid mutation have rattled world markets as it forces some governments to reimpose containment measures, while sentiment was jolted further last week by minutes from the Fed's July meeting indicating it could start withdrawing its vast financial support by year's end.

The colossal bond-buying program and record-low interest rates have been a key pillar of the global recovery for more than a year, and the prospect of the cash being withdrawn has stalled that advance.

However, Dallas Federal Reserve boss Bob Kaplan, who is considered a policy hawk, suggested he could rethink his view to taper soon in light of the Delta variant's spread, which is showing signs of hobbling economic growth.

"The thing that I am going to be watching very carefully over the next month, before the next (Fed) meeting, is (whether) it is having a more material impact on slowing demand and slowing GDP growth," he said.

"I'm going to keep an open mind on that, and if it is having a more negative effect that might cause me to adjust my views somewhat from ones that I've stated."

Observers said the general consensus is that even when the Fed finishes winding back support, it is unlikely to immediately start hiking interest rates.

"Markets react to interest-rate hikes much more than tapering and we expect a pause between tapering and the first hike, suggesting liftoff in 2023 and not before," said Esty Dwek of Natixis Investment Managers.

BITCOIN BACK ABOVE $50K

Focus is now on Fed chief Jerome Powell's speech to the Jackson Hole annual conference of central bankers and finance chiefs, with hopes for a clue about a taper timetable.

All three main indexes on Wall Street rallied Friday, and Asia picked up the baton at the start of the week.

Tokyo jumped 1.8 percent while Shanghai, Bangkok and Jakarta were all up more than one percent. Hong Kong, which sank nearly six percent last week, was also up with Sydney, Seoul, Wellington and Mumbai. Taipei jumped more than two percent.

London, Paris and Frankfurt opened sharply higher.

The positive start was mirrored in oil markets, with both main contracts enjoying big gains, having suffered heavy losses recently owing to concerns that the Delta spread would impact demand as countries restrict people's movements.

Crude also rallied, helped by a dip in the dollar caused by the Kaplan remarks, while the observers said concerns over demand could prompt OPEC and other major producers to reconsider plans to increase output each month.

Still, while the week has got off to a healthy start, investors remain cautious about Delta's effect on the recovery outlook, while China's ongoing regulatory clampdown is also keeping optimism in check. 

Bitcoin broke back above $50,000 for the first time since mid-May, boosted by bargain-buying and leading some to predict the cryptocurrency could now be on course to hit $100,000.

"We're seeing some very bullish signs here," Vijay Ayyar, head of Asia-Pacific with crypto exchange Luno in Singapore, said. The currency could "test all-time highs again", he added. Bitcoin hit a record of almost $65,000 in April before suffering a sharp sell-off over the following months.

Agence France-Presse