Oil prices surge, stocks mixed as inflation worries mount

LONDON: Oil prices surged Monday and stock markets traded mixed as investors weighed worries over high inflation against the reopening of virus-hit economies.

After Asian indices closed mostly lower, with sharp losses in Hong Kong and Shanghai, Europe pushed higher approaching the mid-way point.

Benchmark oil contract Brent North Sea crude, which has been rising strongly on rebounding demand, broke Monday past $70 per barrel for the first time since January 2020 after an attack on energy facilities in Saudi Arabia.

Wall Street had surged Friday following news that the US economy created 379,000 jobs in February, reaffirming the view that it is on track for a strong recovery.

The report came just ahead of senators passing Joe Biden's $1.9 trillion rescue plan, setting it up for the US president's signature by the end of the week.

Brent at one point peaked at $71.38 -- the highest level since January 2020 -- before falling back under $70 per barrel.

The strike on the Aramco facilities -- including one of the world's biggest oil ports -- by Yemen's Huthi rebels Sunday followed the bombing of the country's capital Sanaa by a Saudi-led military coalition.

The rising hostilities underscore a dangerous intensification of Yemen's conflict between the coalition-backed Yemeni government and the Iran-backed Huthis, despite a renewed US push to end the war in the crude-rich region.

While surging oil prices were boosting share price across the heavyweight energy sector, they "will only add to the key concern which is dogging (stock) markets -- namely the risk of runaway inflation and a resulting increase in interest rates", noted AJ Bell investment director Russ Mould.

A surge to inflation could force the Federal Reserve and other central banks to wind back the ultra-loose monetary policies that have been a key driver of a year-long equity market rally, according to analysts.

In another sign that the world economy is getting back on track, China at the weekend released data showing a better-than-expected jump in exports in January and February, suggesting global trade is revving up again after being hammered by the coronavirus pandemic.

Inflation fears are mounting as benchmark US 10-year Treasury bond yields continue to rise.

Yields rise as bond prices fall, and investors have been rushing out of them as inflation would eat into their returns over time, sparking the selloff in world markets.

Investors will be keeping tabs on the European Central Bank's policy meeting Thursday, hoping officials will stress their commitment to keeping borrowing costs low, while the Fed is due to gather next week.

Key figures around 1115 GMT -

Brent North Sea crude: UP 0.2 percent at $69.48 per barrel

West Texas Intermediate: UP 0.2 percent at $66.23 per barrel

London - FTSE 100: UP 0.1 percent at 6,638.80 points

Frankfurt - DAX 30: UP 1.3 percent at 14,097.72

Paris - CAC 40: UP 0.8 percent at 5,831.03

EURO STOXX 50: UP 1.0 percent at 3,707.39

Tokyo - Nikkei 225: DOWN 0.4 percent at 28,743.25 (close)

Hong Kong - Hang Seng: DOWN 1.9 percent at 28,540.83 (close)

Shanghai - Composite: DOWN 2.3 percent at 3,421.41 (close)

New York - Dow: UP 1.9 percent at 31,496.30 (close Friday)

Euro/dollar: DOWN at $1.1875 from $1.1919 at 2145 GMT

Pound/dollar: FLAT at $1.3841

Euro/pound: DOWN at 85.81 pence from 86.08 pence

Dollar/yen: UP at 108.51 yen from 108.36 yen