Shares climb again as energy price dip eases stagflation fears

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LONDON (Businesshala) – World stock markets got their foot back on gas on Thursday as hopes rose that Washington could resolve the extent of its debt and the global plunge in energy prices deepened fears of “stagflation” .

FILE PHOTO: The German stock price index DAX graph is pictured at the stock exchange in Frankfurt, Germany October 6, 2021. Businesshala / Staff

Europe’s stocks rallied to 2-1/2-month lows as oil and gas prices eased after a 4% fall in German industrial output, which added to the toxic “stagflation” risk of runaway inflation and moribund growth. be exposed.

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The pan-European STOXX 600 index rose 1.1% in broad-based buying to reverse weekly losses, with miners, utilities and carmakers all driving higher. [.EU]

Bond market borrowing costs also calmed down after a sharp jump a day earlier, taking the sector’s benchmark government yields to their highest point since June.

“We believe the recent pullback (in world stocks) is an opportunity to buy declining cyclical assets – which will include all equities (EM and DM),” said analysts at JP Morgan. Although US tech stocks remain ultra-expensive.

“We do not believe the current price of energy will have a significant negative impact on the economy … even with oil in the $130 or $150 equity markets and the economy can function well,” 2010 Pointing to -15 when oil averaged above $100 a barrel and markets performed well.

Oil was down more than 2% and gas prices fell more than 3%, helping European gas futures to fall back from record highs. [O/R]

Gas prices have risen more than five-fold since the start of the year, and the massive increase in recent weeks has caught the attention of policymakers around the world.

The EU’s energy commissioner, Kadri Simsson, said on Wednesday that the price shock “is hurting our citizens, especially the most vulnerable families” and “there is no question that we need to take policy measures”.

Britain’s National Grid said Britain faced a tight power supply this winter, while local media reported Spain’s energy minister had summoned top executives from three of its main power firms.

back to futures

US futures also jumped, with S&P 500 futures rising 0.5% after wild swings on Wednesday on hopes that congressional Democrats and Republicans can reach a deal to prevent a government debt default.

Top US Senate Republican Mitch McConnell said his party would support an extension of the federal debt limit in December.

“This means President Biden and congressional Democrats will be able to meet their fiscal spending package — now estimated at about $1.9-2.2 trillion,” said Deutsche Bank strategist Jim Reid.

MSCI’s broadest index of Asia-Pacific shares outside Japan closed up 1.8% overnight, its biggest one-day rise since August.

Hong Kong led Asia’s gains, jumping 3% to a one-year low. South Korea’s Kospi lost 1.8%, Australian shares 0.51% and Japan’s Nikkei gained 0.5%, with losses in eight days.

Global markets will focus on US payrolls data due on Friday, with investors predicting that a reasonable figure will mean the Federal Reserve decides at its November meeting to ease its big stimulus program.

The dollar was stable, not far from a 12-month high last month against a basket of currencies and a 14-month high against the euro.

The yield on the benchmark 10-year US Treasury notes was 1.53%, down from Wednesday’s 3-1/2-month high of 1.57%. German dams were still negative -0.19% and gold fell 0.2% to $1,759.89 an ounce. [GOL/]

Additional reporting in Hong Kong by Alun John; Editing by Hugh Lawson


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