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Oil prices surge higher as equities unfazed

By AFP
04 October 2021   |   3:12 pm
Oil prices surged higher on Monday as OPEC+ held to its planned output increase, but US and European equities appeared largely unfazed by the announcement and the latest troubles of Chinese property giant Evergrande.

Pedestrians walk past a gas station in Paris on October 2, 2021, as the price of oil increased in all Europe. (Photo by Thomas COEX / AFP)

Oil prices surged higher on Monday as OPEC+ held to its planned output increase, but US and European equities appeared largely unfazed by the announcement and the latest troubles of Chinese property giant Evergrande.

US oil prices soared to their highest level since November 2014, reaching $77.26, as the 23 countries in the OPEC+ group began a videoconference.

Meanwhile, the price of the main international contract, Brent oil, jumped back above $80 per barrel.

Ultimately, OPEC and key allies — known as OPEC+ — decided to stick with their planned increase next month in oil production of 400,000 barrels despite worries that the high prices could dampen consumer demand.

Most European stock markets were modestly higher in afternoon trading, while the Dow was roughly steady as Wall Street opened, although the S&P 500 and Nasdaq Composite both sagged.

“Global supply chain challenges continue to hamper global economic activity and boost inflation, while expectations remain elevated regarding global monetary policies heading down the tightening path,” said analysts at Charles Schwab brokerage.

While some analysts have warned oil prices remaining above $80 per barrel could begin to hurt demand as global economies are already struggling with transportation problems, equities largely held steady following the OPEC+ announcement.

Evergrande worries
In Asia, shares mostly rose, but Hong Kong sank on fears about troubled property giant China Evergrande, which suspended trading in its shares.

The crisis at Evergrande, which is drowning in a sea of debt worth more than $300 billion, has roiled markets in recent weeks on fears that its failure could spill over into the wider Chinese economy and possibly further.

The firm said in a statement that the halt in the trading of its shares was called “pending the release by the Company of an announcement containing inside information about a major transaction”.

The news came as reports said Hopson Development Holdings planned to buy a 51 percent stake in its property services arm.

However, traders remain concerned Evergrande will miss payments on bond obligations, putting it in default.

Hong Kong stocks, already under pressure owing to concerns about China’s crackdown on a range of industries including tech firms and casinos, sank more than two percent.

Tokyo fell 1.1 percent — a sixth straight loss — while Taipei was also in negative territory.

– Key figures around 1330 GMT –
London – FTSE 100: UP 0.2 percent at 7,044.17 points

Frankfurt – DAX: FLAT at 15,157.57

Paris – CAC 40: UP 0.2 percent at 6,527.17

EURO STOXX 50: DOWN 0.1 percent at 4,031.47

New York – Dow: UP less than 0.1 percent at 34,337.93

Tokyo – Nikkei 225: DOWN 1.1 percent at 28,444.89 (close)

Hong Kong – Hang Seng Index: DOWN 2.2 percent at 24,036.37 (close)

Shanghai – Composite: Closed for a holiday

Euro/dollar: UP at $1.1628 from $1.1596 at 2100 GMT on Friday

Pound/dollar: UP at $1.3605 from $1.3546

Euro/pound: DOWN at 85.48 pence from 85.60 pence

Dollar/yen: UP at 111.10 yen from 111.05 yen

Brent North Sea crude: UP 1.7 percent at $80.63 per barrel

West Texas Intermediate: UP 1.5 percent at $77.01

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