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Stocks slip as hot oil fuels inflation gyrations

EconomyFeb 18, 2021 06:45AM ET
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2/2 © Reuters. A woman holding umbrella walks near an electric board showing Nikkei index at a brokerage in Tokyo 2/2

By Marc Jones

LONDON (Reuters) - World stocks were battling to avoid a second day of declines on Thursday as hints of rising inflation led by a one-year high in oil prices and the strongest copper prices in nearly a decade kept traders in check after a boisterous run up.

Europe's share markets managed to scrape together some early gains as commodities bulls drove drillers and miners up 2.5% to offset disappointing earnings numbers from companies including Airbus and Orange.

Wall Street futures were stuck in the red, though, and most of Asia's indexes had dipped overnight. China returned from its Lunar New Year holiday to the sight its central bank draining 260 billion yuan ($40.31 billion) from money markets, raising concern about backdoor policy tightening.

Government bond yields were taking a breather after the inflation-driven sell-off in global fixed income, although the commodities charge kept petro-currencies like the Canadian dollar, Norwegian crown and Russian rouble edging higher.

"The clear theme right now is the reflation rotations and gyrations in markets all over the place," said Arnab Das, Invesco's global market strategist .

Strong U.S. retail sales on Wednesday, signs the Federal Reserve plans to maintain its record low interest rates and a "go big" U.S. stimulus plan are all stoking optimism despite the coronavirus pandemic.

A deep freeze in Texas has continued to drive up oil prices too, as the unusually cold weather hampers output in the largest U.S. crude-producing state.

Brent crude topped $65 a barrel for the first time in over a year on Thursday. U.S. West Texas Intermediate crude rose to $61.80 a barrel. Both are up over 300% since last April.

Benchmark copper prices on the London Metal Exchange rose as much as 2.4% to $8,595 a tonne as well. That is their strongest level since April 2012 and nearly double what they fell to in March last year as COVID worries erupted.

Gold, considered an inflation hedge, snapped a five-day losing streak. Emerging-market stocks broke their longest winning streak since June as investors seized an opportunity to cash in some gains.

In South Africa, shares were set for their worst day in three weeks after a study showed that Pfizer (NYSE:PFE)'s vaccine might not be effective against the country's aggressive COVID variant.

The world's best-performing currency this year - the Turkish lira - climbed another 0.5% as the central bank maintained its 17% interest rates and reiterated it could raise them again if needed.

Graphic: Best and worst performing markets over the last wek - https://fingfx.thomsonreuters.com/gfx/mkt/jbyvrdmozve/Pasted%20image%201613644538590.png

Stocks slip as hot oil fuels inflation gyrations
 

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Comments (7)
William Smith
William Smith Feb 18, 2021 7:17PM ET
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$120 oil did not ignite inflation when $120, why blame it now? Inflation when unemployment is at 8% is only possible with irresponsible spending on mostly pork as in Pelosi's "covid relief pork bill".
Daniel Lu
Daniel Lu Feb 18, 2021 8:44AM ET
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Buy VIX at the opening bell
Jim Jones
Jim Jones Feb 18, 2021 7:01AM ET
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Good that noone is driving or flying anywhere. Maybe the Government should start giving out free oil...
Jyoti Basu
Jyoti Basu Feb 18, 2021 2:05AM ET
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Only product that china made is Covid 19 which wasnt a knock off
David David
David9 Feb 18, 2021 2:05AM ET
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No, WHO said virus could come outside of China from frozen food...
moahmmed ahmed
moahmmed ahmed Feb 18, 2021 2:05AM ET
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All of us know who made covid 19 then why we are targeting china.their products are indispensable.
Shane Gg
Shane Gg Feb 18, 2021 2:05AM ET
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AmericaIsKing oftheGalaxy
AmericaIsKing oftheGalaxy Feb 18, 2021 12:49AM ET
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ask jack ma how it goes when you invest in china lol. Youll probably never see your money when it counts
David David
David9 Feb 18, 2021 12:28AM ET
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I told you guys... China is an economic beast... China is the only place with huge growth ahead...
AmericaIsKing oftheGalaxy
AmericaIsKing oftheGalaxy Feb 18, 2021 12:28AM ET
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Why does every chinese communist bot think all americans are named David? Lol
Jyoti Basu
Jyoti Basu Feb 18, 2021 12:28AM ET
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Love it norseChina with a huge growth in virus section not in capitalism or democracy dummy knock off
Steven Walters
Wolverex Feb 17, 2021 10:49PM ET
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Actually China is tanking.
Ben Ben Tan
Ben Ben Tan Feb 17, 2021 10:49PM ET
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it has been said for over 3 decades..
Arthur Santos
Arthur Santos Feb 17, 2021 10:49PM ET
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Ten- KING- Kong??🥵 Silly. Don't reply.
 
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