Surging oil prices lift U.S. material, energy stocks; Yen wilts

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NEW YORK (Businesshala) – Oil prices hit a multi-year peak on Monday, boosting U.S. materials and energy stocks, but fears that rising prices will lead to supply-chain crises caused Wall Street to give up early gains. .

FILE PHOTO: A trader works on the floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, US, September 24, 2021. Businesshala / Andrew Kelly / FILE PHOTO

Higher vaccination rates against the coronavirus have supported a revival in economic activity, helping Brent prices in five weeks and US crude in seven.

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US crude jumped 2.5% to $81.31 a barrel, a level not seen since late 2014, and Brent rose 1.9% to $83.98. [O/R]

Analysts are divided on whether energy supplies are tight enough to warrant a $100 per barrel oil test, but most agree that prices are likely to remain higher in the short term.

Basic materials and energy stocks jumped 0.96% and 0.88%, respectively, in the S&P 500, with Refinitiv data showing the broader market outperforming.

The Dow Jones Industrial Average took early gains and lost 0.06%, the S&P 500 0.04% and the Nasdaq Composite just 0.09%.

The pan-European STOXX 600 index rose 0.05% and MSCI’s gauge of worldwide shares rose 0.25%.

However, as US companies enter the third quarter earnings session next week, some analysts expect slow business growth due to supply-chain disruptions and rising prices. That could push US stocks down, some analysts have warned.

Morgan Stanley analysts said in a note, “Whether the final chapter of the mid-cycle transition ends with a 10% or 20% correction in the S&P 500 will be determined by how much earnings decline or outright decline.” has come.”

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“We are gaining confidence in a sharp recession but the timing is more uncertain.”

The bet is that rising prices will prompt major central banks to tighten monetary policy sooner rather than later to raise bond yields and push the dollar to a nearly three-year peak against the Japanese yen.

In the United States, investors expect the Federal Reserve to begin a tougher policy next month by announcing it will reduce its massive bond-buying. This has affected the yen, which is generally sensitive to interest rate differentials.

The Japanese yen weakened by 0.99% versus the greenback at 113.36 per dollar, while the dollar index rose 0.112%.

A strong dollar pushed the euro down 0.01% to $1.1566. [USD/]

The benchmark 10-year US Treasury yield rose to 1.6118% from 1.605% late Friday. The yield on the 2-year note also increased from 0.318% to 0.3198%. [US/]

Gold, commonly seen as a hedge against inflation, was little changed, however, as a stronger dollar limited gains in bullion. Spot gold was steady at $1,756.26 an ounce. US gold futures fell 0.03% to $1,755.80 an ounce. [GOL/]

Taking into account gains in the stock market, bitcoin, a barometer of investors’ risk appetite, rose 4.71% to $57,292.92.

Graphic: Oil vs US Stock Markets in 2021

Additional reporting by Tom Arnold in London and Wayne Cole in Sydney; Editing by Simon Cameron-Moore, Jacqueline Wong, Alex Richardson, Andrew Heavens and Dan Grebler

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