Oil Prices Spike Higher, Stocks Languish

Oil prices jumped higher Thursday on speculation OPEC+ nations would keep a tight lid on output, while stocks languished on interest rate worries

London, (UrduPoint / Pakistan Point News - 4th Mar, 2021 ) :Oil prices jumped higher Thursday on speculation OPEC+ nations would keep a tight lid on output, while stocks languished on interest rate worries.

The OPEC group of oil producers and its allies began talks on Thursday, with all eyes on whether powerhouses Russia and Saudi Arabia can find an agreement.

The so-called OPEC+ group sharply cut output last year to counter a sudden plunge in prices caused by the coronavirus pandemic.

It subsequently put in place a plan to gradually raise output as demand picks up with economies reopening thanks to Covid-19 vaccination campaigns.

Shortly after 1600 GMT the price of both the main international oil contract, Brent, and the main US contract, WTI, were showing gains of more than 5.0 percent.

"The price has risen as there was talk that Russia is contemplating maintaining existing output cuts rather than seeking to lift production," said market analyst David Madden at CMC Markets UK.

Asian stock markets retreated Thursday as rising inflation fears offset optimism about the re-opening of virus-hit economies, traders said. Europe stocks fell in early trading but pared their losses, with Paris ending the day flat.

But Wall Street was flat to moderately higher in late morning trading before US Federal Reserve chief Jerome Powell speaks.

The growing belief is that in the coming months, a spending splurge from pent-up consumers exiting lockdowns -- and a huge imminent US stimulus package -- will light a rocket under prices.

This in turn could force central banks to wind back ultra-easy monetary policies -- including record-low interest rates -- that have been a key driver of the surge in stocks markets.

The fears on higher interest rates weighed especially heavily on US tech stocks whose valuations are based largely on investors estimates of their future earnings. The tech-heavy Nasdaq Composite tumbled 2.7 percent to below its 50-day moving average.

All eyes will be on US Federal Reserve chief Jerome Powell when he speaks later Thursday, for his latest take on a rise in US Treasury bond yields, a crucial guide of future rate expectations, to one-year highs in recent weeks.

"Bond yield concerns are back to haunt investors," said Sophie Griffiths, market analyst at Oanda trading group.

"The market hasn't been able to shake off rising bond yield concerns despite reassurance from Federal Reserve chair Jerome Powell that any tightening in policy was still a long way off." Meanwhile, US senators are due to start debating Joe Biden's stimulus, with the president giving way on some demands from moderate Democrats to put a cap on the number of people getting a $1,400 cash handout to remove high earners.

The decision, analysts say, could reduce the cost of the rescue package but it would still likely be more than $1.5 trillion.

On the corporate front, takeaway meals app Deliveroo said it had chosen London for its stock market listing, a major boost for the capital's financial sector which has been roiled by Brexit.

Deliveroo, in line with other home-delivery companies, has seen demand soar in the past year owing to lockdowns during the coronavirus pandemic.

No date has been set for the initial public offering (IPO), with the group already valued at more than $7.0 billion (5.8 billion Euros).

- Key figures around 1630 GMT - New York - DOW: UP 0.3 percent at 31,375.72 points EURO STOXX 50: DOWN 0.2 percent at 3,705.67 London - FTSE 100: DOWN 0.4 percent at 6,650.88 (close) Frankfurt - DAX 30: DOWN 0.2 percent at 14,056.88 (close) Paris - CAC 40: FLAT at 5,830.65 (close) Tokyo - Nikkei 225: DOWN 2.1 percent at 28,930.11 (close) Hong Kong - Hang Seng: DOWN 2.2 percent at 29,236.79 (close) Shanghai - Composite: DOWN 2.1 percent at 3,503.49 (close) Euro/dollar: DOWN at $1.2046 from $1.2071 at 2100 GMT Pound/dollar: UP at $1.3996 from $1.3954 Euro/pound: DOWN at 86.11 pence from 86.41 pence Dollar/yen: UP at 107.56 Yen from 106.96 yenBrent North Sea crude: UP 4.5 percent at $66.95 per barrelWest Texas Intermediate: UP 4.5 percent at $64.04 per barrel