European stocks mixed as oil prices warm again
European stocks were mixed on Monday as oil prices approached $115 (£87.11) a barrel as several EU countries pushed for an embargo on Russian oil and gas imports.
Glencore miners (GLEN.L) and Anglo-American (AAL.L) rose 2.4% and 3.5% respectively, with aluminum prices in London jumping nearly 5% after Australia banned alumina and aluminum ore exports to the UK. Russia.
Analysts said the FTSE 100 had recouped most of its 2022 losses. Russ Mould, chief investment officer at AJ Bell, said: “After rebounding last week, the FTSE 100 is now a hair’s breadth away from recouping all of its losses. losses suffered since the beginning of the year.
“This resilient performance has helped put the UK back on the map for overseas investors looking to diversify their holdings.”
The FTSE has fallen 0.9% so far this year, against a 10% drop in Germany’s DAX index, while Hong Kong’s Hang Seng has fallen nearly 9% and the US S&P index 500 by 7%.
“Apart from the FTSE 100, most markets struggled to rise today, but rising commodity prices did the trick for the main UK index,” said Chris Beauchamp, chief analyst. markets on the IG online trading platform.
It comes as German factory costs rose at a record pace last month, raising the risk of a recession even before the Ukraine crisis sends energy prices skyrocketing. Producer prices jumped by more than a quarter in February compared to the same month in 2021, and by 1.4% compared to January.
European Central Bank President Christine Lagarde said on Monday that EU and US monetary policies would be out of sync as the ECB takes a slower pace to raise record rates. “Our monetary policies won’t work at exactly the same pace,” she said.
“Our two economies are at a different place in the economic cycle, even before the war in Ukraine,” Lagarde told a financial conference, adding that the bloc is more war-prone for “geographical reasons.”
Crude prices jumped on Monday after Houthi rebels targeted various Saudi Aramco (2222.SR) oil and gas sites across the kingdom over the weekend. Part of the production was temporarily halted, fueling concerns in an already jittery market.
The European Union is also considering an embargo on Russian oil imports in line with its Western allies as Russia steps up its attacks on Ukraine.
“Some uncertainty has been lifted with the path of interest rates becoming clearer on both sides of the pond,” said Richard Hunter, head of markets at Interactive Investor.
“It remains to be seen whether the proposed rate hikes will be enough to stifle inflation in the near term, but the central banks’ focus and clarity of thought are nonetheless welcomed by investors.”
Meanwhile, gold (CG=F), an asset that investors perceive as a safe haven, stabilized in Asian trading after its biggest weekly decline since June last year.
Bullion was trading at $1,925 an ounce, falling 3.4% after the US Federal Reserve (Fed) raised interest rates last week for the first time since 2018.
Across the pond, U.S. benchmarks started the week in the red as bond selling accelerated as traders braced for higher inflation from the surge. crude prices.
Wall Street S&P 500 (^GSPC) fell 12.61 points, or 0.3%, to 4450.51, after the index posted its best performance since November 2020, up 6.2% last week. The tech-rich Nasdaq (^IXIC) fell 0.7%, while the Dow Jones (^ DJI) fell 0.8% at the London close.
Shares in Boeing (BA) fell 5.2% after a China Eastern Airlines plane, a Boeing 737, carrying 132 people crashed in southwest China.
Investors will keep an eye out for a speech from Fed Chairman Jerome Powell for further clues on the economic outlook later on Monday. Last week, the Fed raised rates for the first time by 25 basis points since cutting them to record lows in 2020. Consumer prices in the United States rose 7.9% in the over the past year, with expectations for up to six more hikes before the end of 2022.
They are also eagerly waiting to see if Russia will face more interest repayments this week. The Kremlin is due to pay $615 million in coupons this month, with a $2 billion bond due April 4.
Overseas markets were muted as traders monitored developments in Ukraine, oil prices and the impact of China’s COVID lockdown. MSCI’s broadest index of Asia-Pacific stocks outside Japan was flat.
It comes as Chinese stocks rebounded with unprecedented strength after days of selling as Beijing continued a regulatory crackdown on tech companies, causing tech stocks to lose billions in value.
Last week, Chinese Vice Premier Liu He said authorities would take steps to shore up financial markets and boost the country’s economy, ending a policy that has seen Chinese authorities crack down on some industries.
The Chinese economy is also being hit hard by an increase in Omicron business. “The resulting lockdowns and restrictions are raising speculation that the People’s Bank of China will need to ease monetary policy in the coming days to support the economy,” said Michael Hewson, chief market analyst at CMC. Markets.