Equities lose ground, reversing early gains, as analysts said high oil prices mean stocks are quick to react to any hint of bad news
A man wearing a protective mask walks past an electronic board displaying Japan’s Nikkei index outside a brokerage in Tokyo, Japan. Picture: REUTERS/KIM KYUNG-HOONAsian shares dropped on Wednesday, reversing early gains, as analysts said sky-high oil prices meant stocks were quick to react to any hint of bad news such as a rate hike by New Zealand’s central bank.
Oil steadied at multiyear highs having been pushed there by concerns about energy supply, and a decision on Monday by the Opec+ group of producers to stick to a planned output increase rather than raising it further. These worries have also weighed on equity markets, concerned that higher energy prices could force central banks to raise rates more quickly to react to rising inflation.
The decision reinforced concerns that “inflation may trigger more rate hikes from different central banks in the future, as stagflation is one of the biggest worries in the market”, said Edison Pun, senior market analyst at Saxo Markets. Overnight the Dow Jones Industrial Average rose 0.92%, the S&P 500 gained 1.05% and the Nasdaq Composite climbed 1.25%, despite worries that the US will default on its debt.
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