Global equities mixed; energy shares lifted by US crude rise

Dollar heads higher after above-forecast inflation data

NEW YORK, Sept 14, (Agencies): Rising demand pushed US crude above $50 a barrel on Thursday, while sterling jumped after the Bank of England (BoE) said it was likely to raise interest rates for the first time in a decade in coming months.

Energy shares climbed on Wall Street and in Europe but stocks were mixed worldwide; a gauge of global equity indexes was slightly lower, including the benchmark S&P 500 in the United States, while the Dow and major European indexes rose.

US crude jumped 1.93 percent to $50.25 a barrel and Brent was at $55.79, up 1.14 percent on the day.

Brent has now climbed more than $10 a barrel over the past three months and is close to where it was at the beginning of the year, trading between about $55 and $57 a barrel.

Meanwhile, the new guidance from the Bank of England pushed sterling to a one-year high against the US dollar as investors priced in a more than 50 percent chance of a rate hike before the year’s end.

The central bank said its tolerance for above-target inflation was lessening even if Britain’s departure from the European Union remained a risk. Data this week showed British prices rising faster and unemployment falling to a fourdecade low.

Sterling was last trading at $1.3375, up 1.26 percent on the day.

Britain’s blue-chip FTSE 100 share index fell sharply after the BoE warning, which followed a monetary policy meeting, and closed down 1.14 percent to lows last seen in May.

Energy stocks helped put the Dow in positive territory as Exxon Mobil rose 0.22 percent to $79.93 while Chevron gained 0.25 percent to $114.47.

Also giving the Dow a boost was Boeing, which rose 1.3 percent after Deutsche Bank raised its price target.

In Europe, Italy’s ENI rose 1.03 percent and France’s Total gained 0.46 percent, helping lift the EURO STOXX 50 index of leading EU shares.

MSCI’s gauge of stocks across the globe shed 0.08 percent while the panEuropean FTSEurofirst 300 index rose 0.17 percent.

The dollar index fell 0.24 percent, with the euro down 0.01 percent to $1.1884.

The Japanese yen weakened 0.18 percent versus the greenback at 110.68 per dollar,

US

Wall Street was mixed in early afternoon on Thursday after a Labor Department report showed consumer prices rose more than expected in August, boosting the odds of a third interest rate hike this year.

The S&P and Nasdaq came under pressure due to an Amazon-led decline in consumer discretionary shares and an Apple-led drop in technology stocks, while a jump in Boeing propped up the Dow.

The firming in inflation, along with a weekly jobless claims report that showed the labor market stays near full employment, could cause the Federal Reserve to consider raising rates in December. The Fed has its next policy meeting on Sept 19-20.

The strong CPI data sent US Treasury yields higher, with the two-year yield hitting a seven-week peak. The odds of a hike in December topped 50 percent for the first time since July, according to CME Group’s FedWatch tool.

At 12:36 pm ET, the Dow Jones Industrial Average was up 25.82 points, or 0.12 percent, at 22,184 and the S&P 500 was down 2.63 points, or 0.11 percent, at 2,495.74.

Both indexes eked out new intraday highs.

The Nasdaq Composite was down 21.71 points, or 0.34 percent, at 6,438.48. The index, along with the Dow and S&P closed at record highs on Wednesday.

Six of the 11 major S&P sectors were lower.

The consumer discretionary index was down 0.51 percent, led by declines of more than 1 percent in Amazon , Disney and Charter Communications.

The tech index dropped 0.21 percent, led by a 0.6 percent drop in Apple and a roughly 1 percent decline in Facebook and Alphabet.

The industrials index was up 0.18 percent. Boeing rose 1.3 percent after it won a US defense contract and said it would raise production of the 787 Dreamliner jets.

Pfizer was among the best performing health stocks, rising 2 percent after the company announced positive trial results for a prostate cancer drug.

Advancing issues outnumbered decliners on the NYSE by 1,474 to 1,313. On the Nasdaq, 1,436 issues fell and 1,333 advanced.

Europe

The British pound surged Thursday after the Bank of England hinted at an early interest rate hike, while most of the world’s stock markets languished after disappointing Chinese economic data.

The negative sentiment spilled over into the eurozone where Frankfurt closed lower, but Paris remained, just about, in positive territory.

The metals and mining sector was snagged by the data because China is a top consumer of many raw materials.

Across Europe steelmakers and miners felt the pain, with Arcelor Mittal, Thyssenkrupp, Anglo American, BHP Billiton, Glencore and Rio Tinto all seeing their share prices slide.

Sky shares slipped on news of a formal regulatory probe into 21st Century Fox’s planned takeover of the British pay-television broadcaster.

Britain’s top share index dropped to a four-month low on Thursday as sterling surged after the Bank of England signalled that it was likely to raise rates in the coming months, weighing on the FTSE 100’s predominantly dollar-earning constituents.

The FTSE 100 ended the session 1.1 percent lower at 7,295.39 points, underperforming the broader European market which closed in positive territory.

Financials also fell, with HSBC and Barclays dropping 1.5 percent and 0.9 percent respectively, while mining stocks saw some sizeable declines as the price of copper slid on the back of disappointing data from China.

Shares in Rio Tinto, BHP Billiton, Glencore and Anglo American were all down between 2.4 percent to 3.4 percent.

Morrisons, Britain’s No. 4 supermarket, fell about 5 percent after publishing first-half results.

British fashion chain Next, however, was a bright spot with a 13 percent surge in its shares after it lifted its guidance, saying that it had managed to cushion the inflationary impact of a weak pound.

Asia

The dollar built on its recovery against the yen Thursday on rekindled hopes for Donald Trump’s tax plan but most Asian markets retreated on profit-taking following gains earlier in the week.

The greenback bounced back above 110 yen, having fallen last week to a 10-month low around 107.30 yen on worries about North Korea’s missile and nuclear tests.

In Asian trade the dollar extended gains against the Japanese unit, while it was also building on a rally against the euro.

Tokyo’s Nikkei fell 0.3 percent after climbing for three straight days as the softening yen was unable to fend off profit-takers.

Hong Kong slipped 0.4 percent and Shanghai pared early gains to end down 0.4 percent after a disappointing print on Chinese factory production, retail sales and state investment.

Sydney lost 0.1 percent and Singapore eased 0.4 percent but Seoul jumped 0.7 percent on a weaker won. Wellington eased but Jakarta, Manila and Taipei were higher.

Key figures around 08:20 GMT Tokyo — Nikkei 225: DOWN 0.3 percent at 19,807.44 (close)

Hong Kong — Hang Seng: DOWN 0.4 percent at 27,777.20 (close)

Shanghai — Composite: DOWN 0.4 percent at 3,371.43 (close)

London — FTSE 100: DOWN 0.2 percent at 7,368.00

Dollar/yen: UP at 110.50 yen from 110.47 yen

Oil

Oil prices rose on Thursday, taking US crude above $50 a barrel for the first time in a month after the International Energy Agency (IEA) forecast the market would continue to tighten as fuel demand increased.

Brent was up 45 cents at $55.61 a barrel by 13:45 GMT. US light crude rose 77 cents to a high of $50.07 before easing to trade around $49.95, up 65 cents. The US benchmark last traded above $50 on Aug 10.

Brent has now climbed more than $10 a barrel over the past three months and is close to where it was at the beginning of the year, trading between about $55 and $57.

The IEA on Wednesday raised its estimate of 2017 world oil demand growth to 1.6 million barrels per day (bpd) from 1.5 million bpd.

The agency said a global oil surplus was shrinking thanks to strong European and US demand as well as production declines in OPEC and non-OPEC countries.

“Stronger demand and supply restrictions from OPEC and Russia are the main reasons for the oil price upsurge,” said Forex.com analyst Fawad Razaqzada.

Barclays Research said in a note that the supply side of the equation was beginning to look bullish:

“Unrest in Iraq and Venezuela should keep output there in check, regional crude oil contangos have dissipated and stocks are gradually declining,” it said.

The Organization of the Petroleum Exporting Countries and other producers, including Russia, have agreed to reduce crude output by about 1.8 million bpd until next March in an attempt to support prices.

Gold

Gold steadied above an earlier twoweek low on Thursday as the dollar softened despite strong US consumer inflation data, which could allow further interest rate increases from the Federal Reserve.

The US currency was down 0.2 percent against a basket of currencies, having posted its biggest one-day rise in six weeks on Wednesday.

The dollar was weaker even though data showed US consumer prices accelerated in August amid a jump in the cost of gasoline and rental accommodation, signs of firming inflation that could allow further monetary policy tightening.

Spot gold was up 0.2 percent at $1,324.86 an ounce at 13:40 GMT, above an earlier low of $1,315.71, its weakest since Aug 31.

US gold futures for December delivery added 0.02 percent to $1,328.20. With short positioning in the dollar near record levels, any signs that US inflation is picking up could support the case for another rate increase and send the US currency significantly higher, analysts said.

The Fed has a 2 percent inflation target, and a series of subdued inflation readings have dampened expectations for further rate rises in the near term.

Although in the longer run a more inflationary environment could support gold demand, both a stronger dollar and higher rates would probably weigh on the metal in the near term.

Spot prices hit their highest in more than a year last week at $1,357.54 an ounce on the back of a softer dollar and concerns over North Korea’s nuclear ambitions, which knocked stocks sharply lower.