Stocks stumble, bond yields climb; oil instigates inflation worries

Shares across the globe fell with government bond yields rising on Wednesday alongside the increase in oil prices, the highest hit in 7 years for the commodity. This factors in the apprehension of rising inflation.

The Euro STOXX 600 fell by 1.8%, hurting its gains on its best day in 11 weeks on Tuesday, with tech stocks experiencing more than a 2% decrease while Germany hitting a loss of 1.6%.

It is seen to affect Wall Street, where U.S. futures indicate losses of 0.9%-1.1%.

Oil prices weigh the equity markets down as it hits its highest since Nov. 2014, causing investors to scramble over energy costs that may compel central banks to raise rates to best rising inflation.

U.S. crude climbed at 0.4%, placing the cost of a barrel at $79.22. Brent crude likewise climbed at 0.4%, pegging the price at $82.87, bringing it to a three-year top in an earlier session.

Concerns surrounding energy supply and the anticipated producers’ decision on Monday to stick to a proposed output increase rather than raising it were in fact the reason behind the increases.

The market’s anxiety over impending inflation pushed a sell-off in U.S. Treasuries and in the eurozone benchmark debt and supported the dollar.

Global strategist to JP Morgan Asset Management, Mike Bell has this to say about the inflationary angst:

“Higher oil – and commodity prices in general in terms of gas and oil – are feeding through into higher bond yields, because it has an inflationary implication,”

He further adds:

“The market is looking at that and thinking ‘is there a scenario in which inflation that everyone has said might be transitory, being a little bit more persistent?'”