Stocks Stumble, Oil Tumbles As Ship Blocks Suez Canal

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A handout picture released by the Suez Canal Authority on March 25, 2021, shows Egyptian tug boats trying to free Taiwan-owned cargo MV Ever Given (Evergreen), a 400-metre- (1,300-foot-)long and 59-metre wide vessel, lodged sideways and impeding all traffic across the waterway of Egypt’s Suez Canal. PHOTO: AFP / Suez CANAL

European and US stock markets sank on Thursday, bucking gains in Asia, as investors remain torn between economic optimism and ongoing coronavirus turmoil, while oil prices fell as the Suez Canal remained blocked by a grounded ship.

London, Paris, and Frankfurt stocks each declined by around one percent, as dealers dwelled on worries about rising Covid-19 infections and vaccine struggles across much of Europe.

Oil prices resumed falls as a giant container ship remained stuck in the Suez Canal, blocking one of the world’s busiest shipping routes.

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Crude had rebounded by almost six percent on Wednesday in response the Suez news, after slumping by a similar proportion the previous day on worries about demand given continued Covid-19 lockdowns.

– ‘Sluggish vaccine rollout’ –

“Europe is trading broadly lower, extending losses for a second consecutive session as investors keep a close eye on the developing Covid situation,” said OANDA analyst Sophie Griffiths.

“The major economies in Europe such as Germany, France, Italy, and the Netherlands have all taken steps to tighten pandemic restrictions to combat rising Covid cases.

“Simultaneously, the vaccine rollout in the region has been particularly sluggish and marred by problems and chaos,” she added.

After a year-long surge, global equities appear to have run out of steam with expectations of a strong growth rebound stoking fear that prices will soar, forcing central banks to wind in the ultra-low monetary policies that have supported the rally.

And while the stock gains have been boosted by the rollout of inoculations — particularly in Britain and the United States — Europe’s stuttering launch has also been compounded by a jump in new cases that has led to lockdowns and containment measures being reimposed.

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Briefing.com analyst Patrick J. O’Hare said, “for a broader market that has run really far, really fast, it looks to be ruminating about how much further things can realistically run.”

The drop in US first-time jobless claims by nearly 100,000 over the past week, along with a drop in continuing claims by 264,000, fit “the bill of an improving economy that requires increased hiring activity and reduced layoff activity”.

– ‘Remarkable’ Suez impact –

Oil prices dived more than one percent in a rollercoaster week for the commodity.

“What a single vessel can do to the global oil market is remarkable,” said Rystad Energy analyst Bjornar Tonhaugen.

“The stuck vessel in the Suez Canal created the visual definition of a supply route bottleneck, effectively disrupting one of the world’s busiest routes for all commodities.”

Oil, which struck a 14-month high earlier this month, has also suffered heavy selling in the past couple of weeks on fears about the impact on demand caused by new European lockdowns.

– Key figures around 1330 GMT –

London – FTSE 100: DOWN 1.1 percent at 6,636.85 points

Frankfurt – DAX 30: DOWN 1.0 percent at 14,470.41

Paris – CAC 40: DOWN 0.8 percent at 5,902.93

EURO STOXX 50: DOWN 1.0 percent at 3,793.68

New York – Dow: DOWN 0.5 percent at 32,267.97

Tokyo – Nikkei 225: UP 1.1 percent at 28,729.88 (close)

Hong Kong – Hang Seng: DOWN 0.1 percent at 27,899.61 (close)

Shanghai – Composite: DOWN 0.1 percent at 3,363.59 (close)

Euro/dollar: DOWN at $1.1808 from $1.1813 at 2200 GMT

Pound/dollar: UP at $1.3726 from $1.3686

Euro/pound: DOWN at 86.07 pence from 86.31 pence

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Dollar/yen: UP at 109.06 yen from 108.73 yen

West Texas Intermediate: DOWN 3.3 percent at $59.17 per barrel

Brent North Sea crude: DOWN 2.9 percent at $62.56 per barrel

AFP

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