Daily Stock Market News

US Futures Slip As Oil Rise Fans Inflation Fears

  • Global stocks tipped lower Tuesday as soaring oil prices fed worries about hot inflation and interest-rate hikes.
  • US stock futures slipped after Fed official Christopher Waller said he expects 50 basis point hikes to continue.
  • Oil jumped to a two-month high after the EU agreed to ban most Russian imports and China eased COVID curbs.

Global stocks edged lower Tuesday as rising oil prices revived investors’ jitters about high inflation and the scale of coming interest rate hikes by central banks.

Those fears appeared to be outweighing optimism about China’s loosening of zero-COVID restrictions, which have hit its economy.

US stock markets look set to trade lower when they reopen after a break to mark Memorial Day on Monday. Futures on the Dow Jones and S&P 500 were down 0.64% and 0.69% respectively. Those on the tech-heavy Nasdaq 100 were 0.38% lower.

The MSCI All-World index was slightly lower, down 0.08%, with a drop in European stocks driving much of the decline.

The market is awaiting a meeting of

Federal Reserve

Chair Jerome Powell and President Joe Biden later Tuesday for potential signals on the US central bank’s tightening policy. Some analysts have suggested the Fed might pause its planned aggressive interest rate hikes.

Hawkish comments from Fed Governor Christopher Waller on Monday did nothing to dispel worries. He told an audience in Frankfurt that he expects to see 50 basis point hikes continue even beyond the Fed’s neutral 2.5% level.

“Over a longer period, we will learn more about how monetary policy is affecting demand and how supply constraints are evolving,” Waller said. “If the data suggest that inflation is stubbornly high, I am prepared to do more.”

Treasury yields rose Tuesday, reflecting investors’ expectations that interest rates will continue to rise. The 10-year Treasury was up 8 basis points at 2.82%, its highest level since June.

In another sign of inflationary pressure, oil jumped to a two-month high of more than $123 a barrel Tuesday after the European Union agreed to ban most Russian oil imports as part of its sixth round of sanctions.

Meanwhile, authorities in Beijing and Shanghai loosened some of the strict coronavirus restrictions in those Chinese cities, raising the prospect of a pick-up in demand for energy.

Brent crude oil, the global benchmark price, rose 1.88% to $123.55 a barrel. WTI crude, the US benchmark, was 3.28% higher at $118.84 a barrel, and both were at their highest since March.

“The price gain has been nearly 9% in the last four trading days,” Derek Halpennny, head of research at MUFG, said. “This will inevitably fuel broader inflation concerns, and could renew fears of central banks still being behind the curve.”

A surprise rise in German inflation to 8.7% in May on Monday, to reach its highest level in nearly half a century, further fueled jitters.

The pan-European Stoxx 600 slipped 0.49%, and Frankfurt’s DAX was down 0.79%. But London’s value-heavy FTSE 100 rallied 0.26%.

In Asia, the Shanghai Composite and Hong Kong’s Hang Seng 50 gained 1.19% and 1.38% respectively on the COVID reopening hopes. Tokyo’s Nikkei 225 closed 0.33% lower.

Gold slid 0.37% to $1,850.40 an ounce, while bitcoin rallied past $31,500 overnight. The dollar was up around 0.08%.

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