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Stagflation fears from higher oil weigh on US stocks and FX

Brent crude rose above $90 a barrel, with Deutsche Bank noting the move reinforced stagflation concerns and pressured equity and currency sentiment.

Reported · Written up by our desk · Major Pairs

Deutsche Bank strategists said rising oil prices are intensifying stagflation concerns and weighing on equities globally, a backdrop that also carried into foreign exchange sentiment.

FXStreet reported that the S&P 500 logged its worst session of August so far as market breadth weakened, with the index down 0.5%. European shares fell as well, and the negative momentum extended into Asia, while chip stocks provided some support as the Philadelphia semiconductor index rose 1.6%.

The oil move was highlighted as Brent crude ended the prior session up 2.7% and closed above $90 a barrel for the first time in two weeks, then added further gains to trade around $91.5. With that inflation risk anchored to higher energy prices, the US dollar extended an overnight bounce, and GBP/USD dropped toward 1.3500 after weak UK jobs data, while EUR/USD held near 1.1575 to 1.1580 before the focus shifted to the US dollar's next move.

FXStreet also noted gold was holding modest intraday losses below $4,400 heading into the European session and had ended a two day winning streak, as the US dollar steadied and investors looked ahead to potential rate implications tied to oil-driven inflation risks.

Latest closeGold $4,432.00 ▲1.6%|WTI crude $82.40 ▲1.4%|Brent $88.59 ▲1.8%

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