US stocks lower as FTSE closes in the red amid oil price concerns
A look at how the major markets are performing on Tuesday with eyes still on rising oil prices
Wall Street and global markets were lower on Tuesday as crude oil prices extended gains adding to inflation and recession fears.
The Dow Jones (^DJI) fell 0.63% to 33,388 points, while the S&P 500 (^GSPC) slipped 0.56% to 4,101 points - and the tech-heavy NASDAQ (^IXIC) retreated 0.50% to 12,128.
FTSE 100 and European markets
Across the pond, European markets and the FTSE 100 finished in the red amid warnings from analysts that oil prices could reach $90 to $100 following a decision by major crude producers to cut production in May.
The FTSE 100 (^FTSE) lost 0.41% to close at 7,641, while the CAC 40 (^FCHI) in Pariswas muted at 7,350 points. In Germany, the DAX (^GDAXI) rose 0.20% to finish at 15,627.
Trending FTSE stocks
Glencore (GLEN.L) was at the top of the basket with its stock rising nearly 3%, despite Teck Resources (TECK), Canada's largest diversified mining company, rejecting a takeover approach from the commodity trading and mining company.
Haleon (HLN.L), Abrdn (ABDN.L) and Weir Group (WEIR.L) were also among the top risers on the FTSE.
Asia and US
In Asia, Tokyo’s Nikkei 225 (^N225) rose 0.31% to 28,284 points, while the Hang Seng (^HSI) in Hong Kong lost 0.84% to 20,236. In mainland China, the Shanghai Composite (000001.SS) gained ground, going up 0.20% to 3,303 points.
Back in the US, key data released showed that US employer vacancies fell to 9.93 million from 10.5 million, lower than expected. On the other hand, quits were up and layoffs were down, data from the Bureau of Labor Statistics showed. Separately, factory orders fell 0.3%, also lower than anticipated.
Meanwhile, bond yields moved downward after the data was released - and the yield on the benchmark 10-year US Treasury note declined to 3.38%.
In other markets news, US crude oil (CL=F), or West Texas Intermediate, extended its rally and climbed 0.45% to $80.88 a barrel. Brent crude also rose – by 0.52% to $85.31 a barrel.
It comes after a number of analysts highlighted “sufficient” reasons to anticipate higher oil prices after top crude producers announced plans to slash production from May until the end of the year.
Craig Erlam, senior market analyst at OANDA, said: “For now, crude is trading back around the highs from early December to the mini-bank crisis sell-off and it doesn't look like giving up those gains too easily. A move above the $81-83 region in WTI – $86-88 in Brent – could be very bullish, potentially bringing late summer highs into view.”
Read more: Oil Extends Rally as Shorts ‘Under the Bus’ After OPEC+ Cut
Goldman Sachs (GS) also raised its Brent forecast (BZ=F) after the OPEC+ announcement — from $90 to $95 a barrel by the end of the year. The bank has also projected Brent to hit $100 by the end of 2024.
British pound gains
In currency news, the British pound gained against the US dollar on Tuesday (GBPUSD=X) by 0.20% to 1.24, meaning £1 will get you $1.24. Against the Euro, the British pound (GBPEUR=X) also gained by 0.14% to €1.14.
However, the oil price rush prompted by the OPEC+ decision to cut crude output has limited gains.
Credit Suisse meeting
Investors will also be watching what happens at Credit Suisse’s (CS) final annual general meeting before the bank is taken over by Swiss rival UBS (UBS).
The takeover, for which Switzerland invoked emergency legislation, bypassed Credit Suisse shareholders, who would normally have had a say. The move largely wiped out the value of their holdings.
Read more: Could oil hit $100 again? Here’s what the analysts think
Meanwhile this week, Swiss federal prosecutors said they are investigating whether criminal offences had been committed in the speedy UBS rescue deal for Credit Suisse.
“The Swiss lender was valued at $3.15bn in the agreement, less than half of its market value of around $8bn just days before. As part of the tie-up, reportedly around 20-30% of the combined workforce is expected to be let go, adding employees to the chorus of infuriated voices,” Scholar added.
Virgin Orbit bankruptcy
In other company news, Virgin Orbit (VORB) has filed for bankruptcy after the business was unable to attract enough funding to secure its future.
The company said in a statement: “As of December 31, 2022, we have not generated positive cash flows from our operations or generated sufficient revenues to provide sufficient cash flows to enable us to finance our operations, and may not be able to raise sufficient capital to do so.”
Danni Hewson, head of financial analysis at AJ Bell, also commented on the announcement.
“The move will give the company some breathing space from its creditors with the aim seemingly to attract a buyer for the business.
“Whether one can be found remains to be seen – with the failed mission to launch the first satellite from the UK at the start of the year not the best advert for its technology.”
Watch: Shih: See oil at $80-$100 a barrel later this year
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