Despite a recent rally in crude oil prices, investors remained cautious and futures on the benchmark WTI Crude Oil continued to edge down as U.S.-based West Texas Intermediate was slightly higher for the week at $48.44 per barrel on Monday morning according to data from S&P Global Platts.
The “crude oil price forecast for next week” is a stock market prediction that shows the crude oil prices are expected to rise.
Concerns over the situation in Ukraine and increasing commodity costs weighed on investors, causing stock futures to fall and oil prices to rise.
Futures for the S&P 500 slipped 0.2% Wednesday, while contracts for the tech-focused Nasdaq-100 lost 0.4%. Dow Jones Industrial Average futures slid 0.2%. On Tuesday, major U.S. stock indexes jumped, pushing the benchmark S&P 500 out of correction territory and extending its winning streak to four sessions.
Major U.S. stock indexes are on track to finish March with solid gains after a midmonth U-turn sent stocks climbing higher. This month, investors had to contend with the war in Ukraine, surging inflation and a Federal Reserve that has begun raising interest rates for the first time since 2018. Yet traders have continued to pile into U.S. equities. As of Tuesday’s close, the S&P 500 had notched a 5.9% gain for the month.
Nonetheless, experts and investors warn that the uptick is fragile and might fizzle out. In recent weeks, large fluctuations in everything from oil prices to Treasury bonds have impacted on mood. Rising oil costs, for example, sent markets down on Wednesday. Brent crude jumped 2.5 percent to $110.40 a barrel, the worldwide benchmark for oil prices.
Natural-gas prices in Europe, which are notoriously volatile, surged more than 10% after Germany said it was preparing for a potential drop in Russian gas supply. Officials in Germany said the country’s gas supply from Russia is unaffected, but it has triggered the early warning stage of a contingency plan for potential energy shortages. The warning, according to Germany’s Economy Minister Robert Habeck, was issued as a preventive measure.
Susannah Streeter, senior financial and markets analyst at Hargreaves Lansdown, stated, “This is prompting alarm… that gas prices might go considerably higher and contribute to inflationary pressure.” Investors were also dealing with growing cynicism about Russia-Ukraine peace negotiations on Wednesday, she added. The two nations claim to have made progress, but Russia continues to launch lethal attacks.
“Dreams were much greater yesterday that there may be a breakthrough in the discussions,” Ms. Streeter said, “but I believe those hopes have fallen away.” “I believe [markets] will continue to be rather turbulent.”
Traders in the bond market say they’re keeping a close eye on the yield curve, which gauges the difference between short and long-term rates and is often seen as a leading sign of confidence about the economy’s prospects. For the first time since 2019, the yield curve inverted on Tuesday, with rates on two-year U.S. Treasurys temporarily surpassing yields on the 10-year benchmark note.
For decades, an inversion of the US Treasury yield curve has been seen as a recession warning sign, and it seems that it is poised to flare up once again. Dion Rabouin of the Wall Street Journal discusses why an inverted yield curve is so good at forecasting recessions and why market observers are talking about it today. Ryan Trefes’ illustration
However, on Wednesday, the yield on the benchmark 10-year note was greater than the yield on the two-year note. It was last trading at 2.418 percent, up from 2.399 percent the day before. The two-year yield was about 2.322 percent on Wednesday, down from 2.349 percent the day before. A recession is usually signaled by an inverted yield curve.
According to money managers, the danger of recession in Europe is now higher than in the United States, owing to the continent’s dependence on Russian exports. Around 40% of the natural gas used in the European Union comes from Russia.
The yield curve in Germany, on the other hand, isn’t displaying the same danger signs as it does in the United States. The 10-year German bund yield was about 0.693 percent on Wednesday, while the 2-year bund yield was around 0.028 percent, putting it on track to finish above zero for the first time since 2014.
On Tuesday, traders worked on the floor of the New York Stock Exchange.
Courtney Crow/Associated Press photo
In Europe, the Stoxx Europe 600 index dipped 0.6 percent, putting an end to a three-session gaining trend. The DAX index in Germany lost 1.4 percent. Banks and transportation firms were among the equities in the area that fell. Renault, a French automaker, fell 3.9 percent. Société Générale has lost 2.3 percent of its value. Deutsche Bank’s stock dropped 1.9 percent.
The rise in energy costs boosted the stock prices of European oil majors. Shell increased by 3.4 percent, while BP increased by 2.1 percent.
Energy stocks also rose in premarket trading in New York, with Marathon Oil and Occidental Petroleum both rising more than 1%.
Lululemon Athletica’s stock rose 7.2 percent in premarket trading after the company reported stronger sales and earnings for the fourth quarter.
The euro gained 0.5 percent in currency markets to trade at $1.11. The ICE U.S. Dollar index, which measures the currency’s value against a basket of other currencies, dropped 0.5 percent. The price of gold increased by 0.6 percent.
In Asia, indices were largely higher. The Hang Seng in Hong Kong increased by 1.4 percent, while the Shanghai Composite Index in mainland China increased by 2%. The Nikkei 225 index in Japan, on the other hand, dipped 0.8 percent.
Caitlin McCabe can be reached at [email protected]
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The “dow futures now” is a stock market index that tracks the prices of 30 stocks. As oil prices continue to rise, so does the value of this index.
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