Markets mostly slip as inflation fears top recovery hopes

LONDON: Stocks around the world mostly fell Thursday on profit-taking and growing inflation worries which overshadowed optimism about the expected strong economic recovery, the easing coronavirus crisis and US stimulus hopes.

Oil however barrelled upwards to 13-month highs as the severe cold snap in the United States hammers production, trumping news that Saudi Arabia is planning to hike output in light of rising prices.

Wall Street opened lower, with the Dow shedding 0.7 percent, with data showing that US first time unemployment benefits applications are on the rise.

London stocks tumbled 1.4 percent and Paris dropped 0.4 percent, while Frankfurt drifted less than 0.1 percent lower.

Asian markets struggled. Tokyo, Singapore, Seoul, Wellington, Manila, Mumbai and Bangkok all fell, with Hong Kong more than one percent off after a seven-day run-up.

Shanghai rose as it reopened after a week-long holiday, while Taipei and Jakarta also rose and Sydney was essentially unchanged.

Bitcoin meanwhile declined to $51,710, having soared on feverish investor demand late Wednesday to hit a record $52,631.92.

"The quiet atmosphere in European markets has continued," noted analyst Chris Beauchamp at trading firm IG.

"The generally quieter tone to the week, both on the corporate and earnings front, has generally left investors without much in the way of a catalyst."

Global equities have enjoyed bumper gains in recent months on mounting confidence that the world economy will rebound from last year's collapse as Covid-19 vaccination programmes allow people to slowly get back to a semblance of normality.

Underpinning that has been vast amounts of government spending as well as ultra-loose central bank monetary policies and pledges of continued support until the recovery is well underway.

At the same time, that has stoked fears over a surge in inflation and produced a spike in US Treasury yields to around one-year highs.

"Strong US economic data dampened the argument that the economy still needs massive stimulus and... rising inflation expectations start to weigh on valuations," said OANDA strategist Edward Moya.

Stephen Innes at Axi also noted the listlessness in equities trading.

"Stocks desperately need a real pick me up as the index level's lack of enthusiasm was palatable today," he said in a note to clients.

"I think it is due to no other reason than its tough to hold a view until the next destination for yields becomes clearer."

In foreign exchange activity on Thursday, the euro sank close to a one-year low against the British pound, which has been boosted by a successful vaccination drive.

The euro slid to 86.41 pence, the lowest level since mid-March 2020.

Key figures around 1430 GMT -

London - FTSE 100: DOWN 1.4 percent at 6,616.89 points

Frankfurt - DAX 30: DOWN less than 0.1 percent at 13,903.67

Paris - CAC 40: DOWN 0.4 percent at 5,740.48

EURO STOXX 50: DOWN 0.3 percent at 3,687.14

New York - Dow: DOWN 0.7 percent at 31,408.23

Tokyo - Nikkei 225: DOWN 0.2 percent at 30,236.09 (close)

Hong Kong - Hang Seng: DOWN 1.6 percent at 30,595.27 (close)

Shanghai - Composite: UP 0.6 percent at 3,675.36 (close)

Euro/dollar: UP at $1.2077 from $1.2030 at 2200 GMT

Pound/dollar: UP at $1.3960 from $1.3857

Euro/pound: DOWN at 86.51 pence from 86.87 pence

Dollar/yen: DOWN at 105.71 yen from 105.87 yen

Brent North Sea crude: UP 0.5 percent at $64.64 per barrel

West Texas Intermediate: UP 0.6 percent at $61.64