Stocks close below record amid U.S. inflation worries; oil climbs

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WASHINGTON (Businesshala) – World stock indexes slipped on Tuesday, a multi-day rally of record closings brought under wraps as gains and concerns over ongoing inflation fueled broad selling.

FILE PHOTO: A street sign for Wall Street is seen in the Financial District in New York, US, November 8, 2021. Businesshala / Brendan McDermid

Last month came a solid return as producer prices, deepening concerns over inflation and oil prices hit a seven-year high, pushing the US retail gasoline price to $3.42 a gallon, the highest in seven years. Is. Meanwhile, the US Treasury yield declined.

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The U.S. Labor Department said producer prices rose solidly in October, with investors buying up heavily on government-backed debt obligations. The data indicated that high inflation, which has become a bigger concern for investors than the COVID-19 crisis, may persist as supplies remain tight.

Wednesday’s CPI report will be examined for clues to the extent to which producer prices are being passed along to the consumer, whose spending accounts for about 70% of the US economy.

Oil prices rose to a two-week high on Tuesday after the United States lifted travel restrictions and other signs of a post-global pandemic recovery boosting demand outlook, while supplies remained tight.

US crude was recently up 3.11% at $84.48 a barrel and Brent at $85.04, up 1.93% on the day.

The pan-European STOXX 600 index lost 0.19%, while MSCI’s worldwide shares fell 0.23%, after falling within an unchanged high in the prior session.

Global equities were hovering near all-time highs as investors braced for stronger earnings, easing travel restrictions and US infrastructure spending against inflationary risks, which could lead to a tightening of monetary policy.

Emmanuel Kau, head of European equities strategy at Barclays, said: “Markets have accelerated and strengthened, there has been a strong rebound, but the catalyst provided by the third quarter earnings season is coming to an end.”

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Kau said market conditions were far from extreme and many investors remained prudent despite there being no imminent threat to a rally.

He argued that it was “healthy” to see markets pause to digest corporate earnings and news of major central bankers in no hurry to raise interest rates.

Fears of a sudden tightening of monetary policy fueled a fixed-income sell-off in October, but government bond yields have tumbled.

“Central bank pushback against the initial tightening supports a pro-risk stance,” analysts at JPMorgan told clients in a note.

The Dow Jones Industrial Average is down 0.31% and the S&P 500 is down 0.35%. The Nasdaq Composite dropped 0.6%.

The yield on 10-year Treasury inflation-protected securities eased to -1.21%, the lowest since early August, and the yield on the 30-year TIPS touched a record low of -0.592%.

The benchmark 10-year yield was last down 5.8 basis points at 1.439%. Yields on the 30-year bond rose to 1.795%, the lowest since July, and last fell 6.9 basis points to 1.819%.

Yields of both US and Euro zone benchmarks are trading near one-month lows.

“We’re getting monthly inflation numbers, it’s no longer a phenomenon for investment professionals, it’s going mainstream,” said Kevin Flanagan, WisdomTree’s head of fixed income strategy.

Market analysts await Wednesday’s US consumer price data. A stronger-than-expected reading will resume talk of the Federal Reserve raising interest rates sooner than expected.

The dollar index fell 0.094%, the euro rose 0.08% to $1.1595.

The Japanese yen strengthened 0.33% versus the greenback at 112.86 per dollar, while sterling was last trading at $1.356, down 0.01% on the day.

The passage of the US infrastructure bill and China’s export growth pushed up oil prices and supported the outlook for energy demand.

Saudi Arabia’s state-owned producer, Aramco, also raised the official selling price for its crude.

Gold prices climbed to their highest level since early September, with the dollar softening ahead of US inflation data for the end of the week.

Spot gold rose 0.4% to $1,831.53 an ounce.

Reporting by Katanga Johnson in Washington; Editing by Richard Chang and Matthew Lewis

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