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Dubai - Crude’s selloff deepened, with prices slumping a fourth day amid a broad commodities retreat that dragged down European stocks. Bonds moved higher, while the euro strengthened with the dollar as investors prepare for key central bank meetings.
Oil couldn’t sustain an early bounce after data showing US inventories at a record battered prices Wednesday. West Texas Intermediate dropped below $50 per barrel as metals also fell. Commodity producers dragged European stocks lower, while the euro rose before Thursday’s European Central Bank (ECB) meeting, where no change in monetary policy is expected.
The Bloomberg Dollar Spot Index is headed for its best back-to-back weeks since December on bets the Fed will raise borrowing costs next week.
The falling commodity prices may provide timely support for the message from the ECB and President Mario Draghi, who are expected to reiterate that monthly bond purchases will run until at least December. While eurozone inflation is currently at 2% for the first time in four years, price growth has been largely driven by energy rather than core goods and services, and high unemployment shows the economy still has slack.
“Until wages and service prices pick up the ECB will remain cautious,” said Semin Soher, senior portfolio manager at Pioneer Investments in Dublin. “They’re likely to look through February inflation as fleeting rather than durable” because of transitory energy prices, she said.
What’s ahead for the markets:
Mario Draghi is expected to keep QE going until the end of the year with underlying price pressures muted. The ECB’s policy decision will be announced at 13:45 and Draghi will hold a press conference 45 minutes later. Official US jobs data for February are due on Friday.
Employers probably added around 200 000 workers to payrolls, in line with the average over the past six months and a sign of steady job growth, economists forecast.
Here are the main moves in markets:
Commodities
WTI crude dropped 2% to $49.30 a barrel as of 13:11. It tumbled more than 5% the previous session to the lowest close since December 7. Gold fell 0.3% to $1 204.99 an ounce, declining for a fourth day as metals sold off across the board.
Stocks
The Stoxx Europe 600 Index retreated 0.3%, with energy companies and miners posting the biggest declines. Futures on the S&P 500 fell 0.1% after the benchmark index lost 0.2% on Wednesday.
Currencies
The Bloomberg Dollar Spot Index rose 0.1% after gaining 0.4% on Wednesday. The British pound fell 0.1% as the euro added 0.2%.
Bonds
Yields on 10-year US Treasuries traded fractionally higher at 2.569% after adding 25 basis points over the past eight days. German bonds were choppy ahead of the ECB meeting, with the 10-year yield rising two basis points. Most other European government bonds advanced, with the yield on 10-year Italian and Spanish bonds each dropping three basis points.
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