US stocks rally as oil price retreats from recent high

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Global stocks rose on Thursday, helped by a drop in oil prices ahead of highly-anticipated US and eurozone inflation data.

Brent crude fell 0.8 per cent to trade at $95.78 per barrel, having earlier risen above $97 a barrel to its highest level since November. US marker West Texas Intermediate lost 1.1 per cent to $92.60.

Wall Street’s benchmark S&P 500 gained 0.8 per cent, while the technology-focused Nasdaq Composite rose 1.1 per cent in choppy trading in New York.

The price of Brent crude had been heading towards $100 a barrel in recent weeks on concerns over global supply, which were stoked on Wednesday after a weekly US government report indicated that stockpiles at a critical delivery hub fell further.

Crude prices have risen 35 per cent since June after some of the world’s biggest producers announced a series of supply cuts to last until the end of this year, adding to investors’ concerns over persistent inflation.

“The biggest question mark for the inflation outlook is the evolution of fuel prices,” said Wouter Thierie, an analyst at ING.

“The danger . . . is that if oil prices stay high for longer, companies will increasingly pass on these higher fuel prices, causing it to trickle down to core inflation again.”

Europe’s region-wide Stoxx Europe 600 index closed up 0.4 per cent, ending a five-day losing streak. France’s Cac 40 advanced 0.6 per cent and Germany’s Dax gained 0.7 per cent.

Despite the pullback in the oil price late on Thursday, recent gains have hit the bond market.

Yields on 10-year UK gilts were up 0.13 percentage points at 4.48 per cent on Thursday. Bond yields rise when prices fall.

Yields on the 10-year German Bund, a regional benchmark in Europe, rose 0.1 percentage points to 2.94 per cent, having hit their highest level since 2011.

The euro advanced 0.5 per cent to trade at $1.0575, edging up from a nine-month low.

Investors are turning their attention to US inflation figures due out on Friday, which are expected to show that the annual rate of consumer price growth rose to 5.3 per cent in August, up from 3.3 per cent in the previous month.

German data on Thursday showed the rate slowed to 4.3 per cent year on year in September, down from 6.4 per cent in the previous month and below analysts’ forecasts of 4.5 per cent. Inflation figures from Spain also came in below expectations. Eurozone inflation data is also due to be published on Friday.

The European Central Bank at its last meeting raised interest rates to an all-time high of 4 per cent and signalled that its historic campaign had probably drawn to a close, unless surprises in the price data push policymakers towards further action.

“Today’s and tomorrow’s inflation figures are likely to be scrutinised by a data-dependent ECB and play a central role in the next interest rate announcement in October,” said Pia Fromlet, euro area economist at SEB.

In Asia, Hong Kong’s Hang Seng index gave up 1.4 per cent, hitting its weakest level in 10 months, while China’s benchmark CSI 300 lost 0.3 per cent. Japan’s Topix was down 1.4 per cent.