Crude oil prices weigh on global stocks
London, UK - World stocks retreated Thursday from four-month highs set this week as record oil prices stoked inflation concerns. The dollar rose after a report that U.S. and European officials were jointly moving to strengthen the U.S. currency.
“The dilemma for global economies is potentially slowing growth and emerging inflation pressures,” said Greg Goodsell, equity strategist at ABN AMRO in Australia. “It will be the task for central banks around the world to manage that quite carefully because they tend to suggest opposite policy reaction in terms of interest rates.”
Late in London morning trading, the FTSE 100 index was down 0.3 percent. The DJ Euro Stoxx 50 index, a barometer of euro zone blue chips, was down 0.5 percent. The CAC 40 in Paris was down 0.6 percent, while the DAX in Frankfurt was down 0.4 percent.
Asian markets were mixed. In Tokyo, the benchmark Nikkei 225 stock average fell 1.1 percent, while the Hang Seng index in Hong Kong fell 0.6 percent. The S&P/ASX 200 in Sydney bucked the trend, gaining 1 percent, as did the Shanghai composite index, which rose 2.2 percent.
U.S. crude oil for June delivery was at $123.05 a barrel, down 48 cents from the record $123.53 set Wednesday. The weak dollar, supply worries and strong demand from emerging economies have pushed crude prices up sixfold since 2002.
A recovery in stocks and credit market assets since early April has shifted investor focus to inflation risks from surging energy, food and other commodity prices, which can erode corporate profits and cause the world’s central banks to raise interest rates again.
The European Central Bank and the Bank of England were expected to leave interest rates steady at their meetings Thursday. The ECB has kept its anti-inflation stance although signs have increased that the economy is losing momentum.
Banking stocks fell after the U.S. Securities and Exchange Commission said that it was scrutinizing investment banks and that it was planning to require top Wall Street firms to publicly disclose their current liquidity and capital positions.
The dollar fell against the euro, but was mixed against other major currencies, after the Financial Times reported, without identifying the source of its information, that U.S. and European officials were united in their wish to see the dollar strengthen against the euro. The newspaper also reported that U.S. officials were “still a long way from agreeing to intervene in currency markets or identifying desired exchange rates - a position that is more popular in Europe.”
The euro fell to $1.5343 from $1.5396 Wednesday afternoon in New York. The pound rose to $1.9583 from $1.9523. The dollar fell to ¥104.10 from ¥105.07 and fell to 1.0547 Swiss francs from 1.0565 francs.
“Until now it seems to be an open door policy for dollar weakness but clearly there are limits,” said Mitul Kotecha, head of global foreign exchange research at Calyon. “The change is the fact that there will be a perception that U.S. officials do see limits in this move in the dollar.”
“The dilemma for global economies is potentially slowing growth and emerging inflation pressures,” said Greg Goodsell, equity strategist at ABN AMRO in Australia. “It will be the task for central banks around the world to manage that quite carefully because they tend to suggest opposite policy reaction in terms of interest rates.”
Late in London morning trading, the FTSE 100 index was down 0.3 percent. The DJ Euro Stoxx 50 index, a barometer of euro zone blue chips, was down 0.5 percent. The CAC 40 in Paris was down 0.6 percent, while the DAX in Frankfurt was down 0.4 percent.
Asian markets were mixed. In Tokyo, the benchmark Nikkei 225 stock average fell 1.1 percent, while the Hang Seng index in Hong Kong fell 0.6 percent. The S&P/ASX 200 in Sydney bucked the trend, gaining 1 percent, as did the Shanghai composite index, which rose 2.2 percent.
U.S. crude oil for June delivery was at $123.05 a barrel, down 48 cents from the record $123.53 set Wednesday. The weak dollar, supply worries and strong demand from emerging economies have pushed crude prices up sixfold since 2002.
A recovery in stocks and credit market assets since early April has shifted investor focus to inflation risks from surging energy, food and other commodity prices, which can erode corporate profits and cause the world’s central banks to raise interest rates again.
The European Central Bank and the Bank of England were expected to leave interest rates steady at their meetings Thursday. The ECB has kept its anti-inflation stance although signs have increased that the economy is losing momentum.
Banking stocks fell after the U.S. Securities and Exchange Commission said that it was scrutinizing investment banks and that it was planning to require top Wall Street firms to publicly disclose their current liquidity and capital positions.
The dollar fell against the euro, but was mixed against other major currencies, after the Financial Times reported, without identifying the source of its information, that U.S. and European officials were united in their wish to see the dollar strengthen against the euro. The newspaper also reported that U.S. officials were “still a long way from agreeing to intervene in currency markets or identifying desired exchange rates - a position that is more popular in Europe.”
The euro fell to $1.5343 from $1.5396 Wednesday afternoon in New York. The pound rose to $1.9583 from $1.9523. The dollar fell to ¥104.10 from ¥105.07 and fell to 1.0547 Swiss francs from 1.0565 francs.
“Until now it seems to be an open door policy for dollar weakness but clearly there are limits,” said Mitul Kotecha, head of global foreign exchange research at Calyon. “The change is the fact that there will be a perception that U.S. officials do see limits in this move in the dollar.”
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