European stocks rebound, oil extends losses

·4-min read
Lockdowns across China -- from the manufacturing hubs of Shenzhen and Shanghai to the breadbasket province of Jilin -- have wreaked havoc (AFP/Noel Celis) (Noel Celis)

European stock markets rebounded Tuesday following days of losses on fears over rising US interest rates fuelled by surging inflation and the impact of China's prolonged Covid lockdowns.

US stocks also bounced higher at the start of trading but gave up their gains as the day wore on.

Meanwhile, oil prices also resumed their slide lower with the benchmark US crude contract, WTI, falling under $100 per barrel.

World stock markets have been on a tempestuous ride this year, and have seen sharp losses after the US Federal Reserve last week hiked interest rates by half a percentage point to get a grip on surging inflation.

Between rising prices eating into the disposable income of consumers and higher borrowing costs, investors have been increasingly concerned about the possibility of recession.

"European markets have seen a modest rebound from yesterday's two-month lows, after the carnage of the last three days, as investors look for signs of a possible base," said market analyst Michael Hewson at CMC Markets UK.

London ended the day with a gain of 0.4 percent, Paris added 0.5 percent and Frankfurt rose 1.2 percent.

"We're seeing a small recovery in stock markets on Tuesday, as investors dust themselves off following the rout at the start of the week," said Craig Erlam, senior market analyst at online trading platform OANDA.

"There's clearly a huge amount of worry about a recession in the markets at the minute as central banks continue to aggressively tighten against the backdrop of a slowing economy and a cost-of-living crisis," he added.

Asian equities mostly sank following sharp losses on Wall Street on Monday.

Oil prices have also taken a drubbing in recent days on worries about demand.

"This week's oil price weakness has been largely driven by reports that the EU is having difficulty in reaching a consensus on its Russian oil ban," said CMC Markets's Hewson.

"Yesterday's weak China trade numbers have also weighed into the overall calculus, as concerns grow over Chinese demand, with the major cities of Beijing and Shanghai on the receiving end of new restrictions."

- Bitcoin woes -

Bitcoin on Tuesday slumped briefly under $30,000, reaching a 10-month low.

The volatile cryptocurrency has lost more than half its value since a November surge saw it reach a record high of nearly $69,000.

While crypto enthusiasts view bitcoin as a hedge against inflation, an influx of more traditional investors tend to view it as a riskier asset.

They have been offloading bitcoin and other digital tokens along with other volatile assets like tech stocks as the US Federal Reserve moves to hike interest rates to tackle decades-high inflation.

Data on Tuesday showed inflation in Greece jumping by 10.2 percent in April, its highest level since 1995, while it reached its highest rate since 1984 in Denmark at 6.7 percent.

Inflation began to rise after countries emerged from Covid pandemic restrictions last year, but it worsened following Russia's invasion of Ukraine, which pushed energy and food prices even higher.

The Ukrainian economy is set to contract by almost one third this year in the wake of Russia's invasion, the European development bank said.

Ukraine's output is set to contract 30 percent compared with an EBRD forecast of minus 20 percent given in March shortly after Moscow's military offensive.

- Key figures at around 1630 GMT -

New York - Dow: DOWN 1.0 percent at 31,937.12 points

EURO STOXX 50: UP 0.7 percent at 3,508.47

London - FTSE 100: UP 0.4 percent at 7,243.22 (close)

Frankfurt - DAX: UP 1.2 percent at 13,534.74 (close)

Paris - CAC 40: UP 0.5 percent at 6,116.91 (close)

Hong Kong - Hang Seng Index: DOWN 1.8 percent at 19,633.69 (close)

Shanghai - Composite: UP 1.1 percent at 3,035.84 (close)

Tokyo - Nikkei 225: DOWN 0.6 percent at 26,167.10 (close)

Brent North Sea crude: DOWN 3.1 percent at $102.64 per barrel

West Texas Intermediate: DOWN 3.2 percent at $99.82 per barrel

Euro/dollar: DOWN at $1.0539 from $1.0563 on Monday

Pound/dollar: DOWN at $1.2320 from $1.2331

Euro/pound: DOWN at 85.55 pence from 85.64 pence

Dollar/yen: DOWN at 130.12 yen from 130.26 yen

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