GLOBAL MARKETS-Wall Street starts groggy, euro blocked by Lagarde
* Wall Street set to start mixed amid mounting rate pressures
* Profits in Brief, Arms Sales Collapse
* Oil cools after hitting $94 a barrel
* BP reports $12.8 profit after oil and gas prices spike
By Mark Jones
LONDON, Feb 8 (Reuters) – Stock markets stumbled on Tuesday as Wall Street opened lower, Europe gave up gains built on BP’s windfall earnings, while the euro was pegged as the Central Bank European Union was trying to calm expectations of higher interest rates.
Wall Street saw a groggy reboot on disappointing results from Pfizer, another drop in shares of Facebook owner Meta and the collapse of Nvidia’s mega deal to buy the company that designs chips for Apple.
Europe has also turned red again, although oil and mining stocks still hold in positive territory after FTSE-listed BP reported a whopping $12.8 billion annual profit on the back of soaring gas prices. and oil.
It was BP’s highest profit in eight years, coming in at $24,353 a minute – more than a person on minimum wage in major economies would earn in a year.
It had also helped traders brush aside warnings from Washington on 33 more Chinese companies and the view of the 10-year US Treasury yield – the most influential driver of global borrowing costs – hitting a new 2-year high.
Currency traders and bond market traders are currently focused on which central banks will raise interest rates fastest and furthest this year on the back of rapidly rising global inflation.
“Central banks around the world have all engaged in a hawkish pivot,” said David Riley of BlueBay Asset Management. “As their tolerance for higher inflation is consistently lower than previously reported, we are moving into a regime where there will be more macro volatility.”
ECB President Lagarde’s comments on Monday that there was currently no need for major monetary policy tightening weakened the euro for a second straight day.
It had initially pushed down bond yields – an indicator of borrowing costs – for highly indebted countries such as Italy, Greece and Spain, although that was reversed when the Spanish ECB council member , Pablo Hernandez of Cos, spoke on Tuesday of a gradual tightening.
Italian government bonds were duly mowed down, with the 10-year yield first falling to 1.78% before rising to 1.85%.
US stocks made a subdued open on Wall Street after earnings disappointments and a further 1.2% decline in shares of Facebook owner Meta after billionaire investor Peter Thiel decided to resign from the board of directors of Facebook. the society. There is also a focus on inflation data this week which may offer more clues to the Fed’s first post-COVID rate hike.
Pfizer fell 3.7% in early trading as the drugmaker’s forecast for its COVID-19 vaccine and antiviral pills fell below Wall Street estimates, while Coty jumped 3% after raising its forecast .
Asia’s session was also volatile overnight. MSCI’s broadest index of Asia-Pacific stocks broadly stabilized, but blue-chip Chinese stocks fell to a 19-month low after heavy losses at big tech companies and US export warnings of 33 new Chinese companies.
The prospect of higher global rates had also pushed yields on Japanese government bonds higher, while those on the benchmark 10-year US Treasuries briefly touched 1.96%.
Back in the currency market, the Russian ruble hit a four-week high after marathon talks between President Vladimir Putin and his French counterpart Emmanuel Macron kept hopes that war in Ukraine will be averted.
That helped oil pull out of Monday’s seven-year high of $94 on Monday.
It was trading lower at $92 also ahead of the resumption of indirect talks in Vienna later between the United States and Iran, which could reinvigorate a nuclear deal that could eventually allow more oil exports from the producer. OPEC.
A deal could allow more than a million barrels a day of Iranian oil, more than 1% of global supply, to return to the market, although that was still a remote possibility.
Brent fell $1.30, or 1.4%, to $91.37 a barrel. U.S. West Texas Intermediate crude fell $1.55, or 1.4%, to $89.95.
Eight rounds of indirect talks between Tehran and Washington since April have yet to yield an agreement on resuming the 2015 nuclear deal. Differences remain over the speed and scope of lifting sanctions on Tehran.
(Additional reporting by Sujata Rao and Alex Lawler in London and Anshuman Daga in Singapore; Editing by Tomasz Janowski and Emelia Sithole-Matarise)