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Oil surges as stocks trade mixed amid latest Covid-19 wave

John BIERS
·3-min read
Restricted flow: a satellite image shows the 'Ever Given' blocking the Suez Canal, a key route for cargo and oil trade

Oil prices surged Wednesday following the blockage of the Suez canal, while stocks were mixed as governments struggle to contain the latest wave of the coronavirus.

Crude futures surged six percent as traders assessed the likely impact from the grounding of a giant container ship in one of the world's busiest shipping routes.

Dozens of ships were blocked by the Panama-flagged ship, but historic sections of the canal were reopened in an effort to ease the traffic jam.

"The energy market has largely priced in the short-term crude demand hit," said Ed Moya of Oanda.

Meanwhile, Wall Street stocks suffered another down day, despite strength in petroleum-linked equities. The tech-rich Nasdaq slumped 2.0 percent behind drops in Apple, Facebook and other tech giants.

"We're sort of taking a pause for breath," said FHN Financial economist Chris Low. "There's definitely some rotation going on."

Low said disappointing durable goods data fueled the rout, including weakness in motor vehicles and parts, an industry that has seen production cuts due to a shortage of semiconductors.

Another source of economic pressure has been the Texas power outage in February, Low said.

Angst is also rising in the wake of congressional appearances by Treasury Secretary Janet Yellen, who confirmed that President Joe Biden is willing to hike corporate taxes to pay for his administration's priorities.

"People thought Biden was going to be centrist and moderate, but his taxing and spending program are moving him further left than expected," said Gregori Volokhine of Meeschaert Financial Services. "All the talk of tax hikes is making investors nervous."

- Easter mea culpa -

European stocks were mixed amid continued concerns the continent's worsening coronavirus crisis could derail economic recovery, although survey data showed the eurozone economy had returned to growth in March for the first time in six months.

Europe's two biggest economies, Germany and France, have been forced along with other countries to impose new restrictions to battle the disease, as they also struggle to get vaccination programs rolling properly.

But Germany scrapped plans to close most of the country's shops over Easter from April 1 to 5 after stinging criticism of the plan.

The government instead asked people to stay home over the holiday and Chancellor Angela Merkel issued a mea culpa after reversing the measures.

In Asia, Hong Kong was among the biggest losers, dropping by two percent on news that the government had suspended its Pfizer/BioNTech vaccine program over concerns about packaging, dealing a blow to the city's already slow inoculation effort.

Hong Kong's Hang Seng Index has now fallen into a correction, having lost more that 10 percent from its recent high.

Tokyo also shed two percent, while Shanghai, Mumbai and Jakarta each lost more than one percent.

- Key figures around 2040 GMT -

New York - Dow: DOWN less than 0.1 percent at 32,420.06 (close)

New York - S&P 500: DOWN 0.6 percent at 3,889.14 (close)

New York - Nasdaq: DOWN 2.0 percent at 12,961.89 (close)

London - FTSE 100: UP 0.2 percent at 6,712.89 (close)

Frankfurt - DAX 30: DOWN 0.4 percent at 14,610.39 (close)

Paris - CAC 40: UP less than 0.1 percent at 5,947.29 (close)

EURO STOXX 50: UP 0.1 percent at 3,832.55 (close)

Tokyo - Nikkei 225: DOWN 2.0 percent at 28,405.52 (close)

Hong Kong - Hang Seng: DOWN 2.0 percent at 27,918.14 (close)

Shanghai - Composite: DOWN 1.3 percent at 3,367.06 (close)

Euro/dollar: DOWN at $1.1812 from $1.1849 at 2200 GMT

Pound/dollar: DOWN at $1.3681 from $1.3752

Euro/pound: UP at 86.32 pence from 86.17 pence

Dollar/yen: UP at 108.71 yen from 108.59 yen

West Texas Intermediate: UP 5.9 percent at $61.18 per barrel

Brent North Sea crude: UP 6.0 percent at $64.41 per barrel

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