Morning Chronicle - Oil prices, US jobs data weigh on stocks

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Oil prices, US jobs data weigh on stocks
Oil prices, US jobs data weigh on stocks

Oil prices, US jobs data weigh on stocks

A surge in oil prices to close to $93 per barrel as well as robust US jobs data weighed on stock prices Friday as they fuelled expectations central banks will move forcefully to raise interest rates.

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Oil prices struck seven-year highs as traders bet on continued improvement in demand thanks to the economic reopening, and with the United States hit by a cold snap.

Lingering worries over Ukraine-Russia tensions were also playing a key role in the spike, with analysts predicting $100 could be breached soon.

But high oil prices would push inflation even higher, with central banks already under pressure to raise interest rates.

US data released Friday showed the US economy added 467,000 jobs in January, far more than had been expected given the renewed onslaught of Covid-19 infections caused by the Omicron variant.

"The key takeaway from the report is that it will inflame concerns about the Fed being behind the curve in fighting inflation," said analyst Patrick J. O'Hare.

The US Federal Reserve is expected to begin raising interest rates next month, but more analysts are expecting it may do so more agressively, by moving with half percentage point hikes rather than quarter point increases.

On Wall Street, both the Dow and S&P 500 were roughly flat in early trading. But the tech-heavy Nasdaq was higher thanks to better-than-expected earnings reports from Amazon, Snap and Pinterest.

Shares in Amazon jumped more than 10 percent as the company reported revenues jumped 9 percent to $137.4 billion in the fourth quarter.

Meanwhile, stocks were lower in Europe, where the European Central Bank's apparent shift in its outlook towards lifting rates this year itself stunned investors Thursday.

ECB chief Christine Lagarde had for months said inflationary pressures would be temporary and dissipate as the world economy reopens and supply chains resume -- allowing the bank to keep rates ultra-low this year.

But a record jump in eurozone prices last month and no sign of them easing has forced her to re-evaluate, saying the "situation had indeed changed".

The news boosted the euro -- the single currency recording a weekly gain of nearly three percent against the dollar.

But an ECB board member, French central bank chief Francois Villeroy de Galhau, warned against making predictions.

"If the direction of our trajectory is clear, no one should jump to conclusions about its time," he said.

- Key figures around 1430 GMT -

London - FTSE 100: DOWN 0.1 percent at 7,220.96 points

Frankfurt - DAX: DOWN 1.6 percent at 15,116.21

Paris - CAC 40: DOWN 0.7 percent at 6,954.47

EURO STOXX 50: DOWN 1.2 percent at 4,091.03

New York - Dow: UP less than 0.1 percent at 35,125.39

Tokyo - Nikkei 225: UP 0.7 percent at 27,439.99 (close)

Hong Kong - Hang Seng Index: UP 3.2 percent at 24,573.29 (close)

Shanghai - Composite: Closed for a holiday

Euro/dollar: DOWN at $1.1426 from $1.1438 late Thursday

Pound/dollar: DOWN at $1.3524 from $1.3601

Euro/pound: UP at 84.43 pence from 84.06 pence

Dollar/yen: DOWN at 115.34 yen from 114.95 yen

Brent North Sea crude: UP 2.6 percent at $93.46 per barrel

West Texas Intermediate: UP 2.9 percent at $92.86 per barrel