Crude oil whipsawed on production and stockpiles reports, while Asian stocks followed US and European equities lower before an expected interest-rate hike by Federal Reserve policy makers.
WTI jumped above US$48 a barrel as a reported decline in US crude stockpiles countered a boost in output from Saudi Arabia, reversing an earlier plunge of as much as 2.7 per cent. Brent crude is also up, above $51 a barrel. Stocks were lower from Sydney to Tokyo, while the US dollar weakened after Tuesday’s gains. Hong Kong shares pared losses as Chinese premier Li Keqiang said China is pushing hard to cut financial risk and there are bright prospects for cooperation with the US The yield on 10-year Treasuries remained near 2.6 percent.
The swings in oil interrupted the calm that’s gripped markets ahead of central bank decisions, European political drama and a raft of economic data that could set the tone for financial markets for weeks to come. With the Fed all but certain to raise rates, investors have been weighing how oil’s precarious level and looming inflation readings could impact the central bank’s path for future moves.
Volatility is rising this week, with the VIX in the US jumping the most in a month on Tuesday, while a gauge for the Nikkei 225 Index is up for a fourth straight day. Elections remain a wild card for investors. Today’s vote in the Netherlands will deliver a reading on the state of populism in Europe as races in France and Germany heat up.
US trading was more muted than normal on Tuesday as a late-winter storm blanketed the eastern part of the country in snow. Airlines canceled thousands of flights, wholesale power prices surged and natural gas futures gained as the storm spun up the Atlantic coast.
* Bloomberg
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