Global Markets: U.S. shares drop as soaring oil prices stir inflation woes; Yen wilts

Modern Land (China)

11/10/2021 21:42

(Updates to U.S. market close)
    * U.S. stocks fall as surging oil stokes inflation risk
    * Dollar reaches highest on yen since late 2018 
    * Angst about Chinese property developer Evergrande could
keep
Asia on edge

    By Koh Gui Qing
    NEW YORK, Oct 11 (Reuters) - U.S. shares fell on Monday,
having whip-sawed between gains and losses as soaring oil prices
that hit multi-year peaks stoked fears about rising prices and
tighter monetary policy, lifting the dollar to a near-three-year
high against the yen.
    A rally in basic material and energy shares on higher oil
prices initially lifted major U.S. stock indices. But the gains
faded as investors focused on the start of the U.S. corporate
earnings season next week.
    Some analysts anticipate businesses reporting slowing growth
due to supply-chain snags and rising prices.  urn:newsml:reuters.com:*:nL1N2QW2PQ They
warned that this could lead to a drop in U.S. stocks.
    "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 growth decelerates or has to outright
decline," Morgan Stanley analysts said in a note.
    "We are gaining confidence in a sharper deceleration but the
timing is more uncertain."
    The Dow Jones Industrial Average  .DJI  lost 0.72%, the S&P
500  .SPX  fell 0.69%, and the Nasdaq Composite  .IXIC  dropped
0.64%.
    The pan-European STOXX 600 index  .STOXX  was little
changed, edging up just 0.05%, while MSCI's gauge of stocks
across the globe  .MIWD00000PUS  shed 0.33%.
    Heading into Tuesday, the mood in Asia could also be hit by
news that Chinese property developer Evergrande  3333.HK  may
miss its third round of bond payments in as many weeks and
rivals Modern Land and Sinic became the latest scrambling to
delay deadlines.  urn:newsml:reuters.com:*:nL1N2R71H4
    Oil prices, which had jumped on Monday on rebounding demand
and cutbacks in supply, gave up some of their early gains but
still ended the session higher.  O/R 
    Brent crude  LCOc1  rose 1.5% to $83.65 a barrel, after
climbing as high as $84.60, its highest since October 2018.
    U.S. West Texas Intermediate crude  CLc1  also added 1.5% to
finish at $80.52, after touching its highest since late 2014 at
$82.18.
    Analysts are divided over whether energy supplies are tight
enough to warrant oil testing $100 a barrel, but most seemed to
agree prices are likely to stay elevated in the short-term.
    That helped basic materials and energy stocks in the S&P
500. They jumped 0.96% and 0.88% respectively, Refinitiv data
showed, outperforming the broader market.
    Rising prices are also fueling bets that major central banks
will tighten monetary policy sooner rather than later, lifting
the dollar to a near three-year peak against the Japanese yen.
    In the United States, investors expect the Federal Reserve
to begin tightening policy by announcing a tapering of its
massive bond-buying next month. This has hobbled the yen, which
is typically sensitive to interest-rate differentials. 
    The yen weakened 1.02% against the greenback at 113.38 per
dollar, and the dollar index  =USD  rose 0.238%.
    A stronger dollar pushed the euro  EUR=EBS  down 0.14% to
$1.1551.  USD/ 
    Gold, usually seen as a hedge against inflation, fell as a
stronger dollar offset any inflation-driven gains. Spot gold
 XAU=  dropped 0.2% to $1,753.42 an ounce. U.S. gold futures
 GCc1  fell 0.15% to $1,753.60 an ounce.  GOL/ 
    Bitcoin  BTC=BTSP , a barometer of investors' risk
appetites, receded a touch but was still up a solid 4.4%.

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Asia stock markets    https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations    https://tmsnrt.rs/2Dr2BQA
Oil vs US stock market in 2021    https://tmsnrt.rs/3AmvpSp
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 (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)
 ((tom.arnold@thomsonreuters.com))
 
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