Oil prices increased after Saudi Arabia and Russia extended supply cutbacks, but the dollar strengthened and most global equities declined.
Oil prices jump global: Following Russian and Saudi Arabian output announcements, the price of the primary international oil contract, Brent crude, exceeded $90 per barrel for the first time this year.
Until the end of the year, Russia said it will continue to limit its oil exports to 300,000 barrels per day, and Saudi Arabia said it would continue to limit its oil production to 1 million barrels per day.
Although crude is fetching significant bids on the announcement, this was somewhat indicated last week, according to Finalto analyst Neil Wilson.
The main US price, WTI, also increased, reaching a high closing since mid-November of $86.69 per barrel.
Oil-related US stocks like Chevron and Devon Energy had gains as oil prices rose, but most industrial sectors saw declines. The S&P 500 index as a whole finished down 0.4%.
The rise in petroleum prices, especially as consumers contend with high loan rates designed to reduce inflation, has raised concerns about a potential decline in demand.
Higher oil prices, according to market analyst Michael Hewson, will make it harder for central banks to reduce inflation.
“We’re already seeing the impact of this trend in higher input prices in today’s PMI numbers pointing to the prospect that inflation is likely to remain sticky in the weeks and months ahead,” the author stated.
Revised PMI surveys on business activity were issued on Tuesday, with the eurozone survey revealing an acceleration in input cost inflation for the first time in almost a year.
While the overall survey showed activity shrinking to a 33-month low, the eurozone services went into a contraction and reached a 30-month low.
Stocks in Frankfurt, Paris, and London all fell.
A PMI survey revealed that China’s services sector expanded last month at a far slower rate than anticipated, which depressed Asian market optimism.
The Caixin Services PMI dropped from 54.1 in July to 51.8 in August.
Although the number is still above 50, it shows that the second-largest economy in the world is slowing down in terms of growth.
The Hong Kong stock market index fell by more than 2%, yet struggling mainland developers like Evergrande and Sunac saw huge gains.
Shanghai had a significant loss as well.
Dow Jones in New York: 34,641.97 (close), down 0.6 percent.
New York – S&P 500: DOWN 0.4 percent at 4,496.83 (close)
New York – Nasdaq: DOWN 0.1 percent at 14,020.95 (close)
London – FTSE 100: DOWN 0.2 percent at 7,437.93 (close)
Frankfurt – DAX: DOWN 0.3 percent at 15,771.71 (close)
Paris – CAC 40: DOWN 0.3 percent at 7,254.72 (close)
EURO STOXX 50: DOWN 0.3 percent at 4,269.16 (close)
Tokyo – Nikkei 225: UP 0.3 percent at 33,036.76 (close)
Hong Kong – Hang Seng Index: DOWN 2.1 percent at 18,456.91 (close)
Shanghai – Composite: DOWN 0.7 percent at 3,154.37 (close)
Euro/dollar: DOWN at $1.0726 from $1.0796 on Monday
Pound/dollar: DOWN at $1.2565 from $1.2625
Dollar/yen: UP at 147.68 yen from 146.47 yen
Euro/pound: DOWN at 85.34 pence from 85.50 pence
West Texas Intermediate: UP 1.3 percent at $86.69 per bar