Oil prices fall back, US inflation at 40-year high

Back down went stocks on Wall Street on Thursday as global markets keep swinging on uncertainty about where inflation, interest rates and the global economy are heading.

In the United States, US inflation hit a 40-year high.

Oil prices had their own swings on Thursday, with a barrel of US crude jumping as much as 5.7 per cent, before flip-flopping between gains and losses. It was trading at US$108.84 per barrel around midday.

Recent surges for energy prices have raised the risk that the economy is set to struggle under a toxic cocktail of stagnating growth and persistently high inflation.

Oil’s back-and-forth moves were just some of the waves of reports buffeting markets worldwide. The European Central Bank said high inflation will push it to wrap up its bond-buying programme meant to boost its economy faster than expected. In the United States, a report showed that consumer prices leaped 7.9 per cent in February from a year earlier. It’s the sharpest spike since 1982, though the reading was largely within expectations.

Altogether, the forces caused a reversal for many of the market’s moves from a day before.

The Dow Jones Industrial Average was down 360 points, or 1.1 per cent, to 32,924, as of 12:15 p.m. Eastern time. The Nasdaq composite was 1.9 per cent lower.

European stocks were hit even harder, with Germany’s DAX losing 2.9 per cent and France’s CAC 40 down 2.8 per cent. Asian stocks earlier in the day mostly rose.

In the energy market, Brent crude, the international standard, rose 0.5 per cent to US$111.66 per barrel. Both it and US benchmark oil are up more than 44 per cent for 2022 so far, though they remain below the peaks they hit earlier this week. US oil briefly topped US$130.

The yield on the 10-year Treasury, which tracks expectations for inflation and economic growth, wavered immediately after the inflation report’s release. It was recently at 2.01 per cent, up from 1.94 per cent late Wednesday.

The two-year US Treasury yield, which moves more on expectations of what the Federal Reserve will do with short-term rates, was at 1.72 per cent, up from 1.68 per cent.

– AP