Global inventories fall after China manufacturing weakens | Economic news


By JOE McDONALD, AP Business Writer

BEIJING (AP) — Global markets fell on Thursday after Chinese manufacturing weakened and Russian bombardment around the Ukrainian capital shook hopes for progress in peace talks.

London, Shanghai, Paris and Tokyo fell while Frankfurt opened higher.

Oil fell nearly $5 a barrel in New York but remained above $100 after President Joe Biden reportedly released US reserves to cool soaring prices amid concerns over a possible disruption of Russian supplies.

OPEC and allied oil producers, including Russia, will decide on Thursday how much crude to pump around the world. Analysts expect the group, known as OPEC+, to stick to its schedule of phased increases to restore output cuts made at the height of the coronavirus pandemic in 2020.

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Russian forces were shelling areas near kyiv and another city after Moscow said it would scale back operations there to promote confidence. Virtual talks on the attempt to end the five-week-old war are due on Friday.

Russia is “pouring cold water on the headlines of constructive ceasefire talks,” Stephen Innes of SPI Asset Management said in a report.

In early trading, London’s FTSE 100 fell less than 0.1% to 7,575.04 while Frankfurt’s DAX gained 0.1% to 7,578.75. The CAC 40 in Paris lost less than 0.1% to 6,743.19.

On Wall Street, the future for the benchmark S&P 500 index was 0.2% higher a day after falling on weaker-than-expected U.S. economic growth. The future for Dow industrialists was virtually unchanged.

In Asia, the Shanghai Composite Index lost 0.4% to 3,252.20 after an index of Chinese manufacturing activity fell to its lowest level in five months following the shutdown of a much of Shanghai and two small industrial cities to fight coronavirus outbreaks.

The Hang Seng in Hong Kong fell 1.1% to 21,996.85.

“The near-term outlook remains highly uncertain,” Julian Evans-Pritchard of Capital Economics said in a report. “Even if the epidemic is soon brought under control, it will still take some time for the economy to get back on track.”

The Nikkei 225 in Tokyo was down 0.7% at 27,821.43 and the S&P-ASX 200 in Sydney was down 0.2% at 7,499.60.

The Kospi in Seoul gained 0.4% to 2,757.65 after data showed improved industrial production in February.

The Indian Sensex fell 0.2% to 58,560.02. New Zealand and Jakarta gained while Singapore and Bangkok fell.

The S&P 500 fell 0.6% on Wednesday after Commerce Department data showed the U.S. economy grew at an annual rate of 6.9% in the last quarter of 2021.

The Dow Jones Industrial Average slipped 0.2% and the Nasdaq composite lost 1.2%.

Markets have mostly gained ground this week as talks between Russia and Ukraine appear to be progressing.

Investors were already worried about rising US interest rates and China’s economic slowdown.

On Thursday, the Commerce Department is due to release its personal income and spending report for February. The Labor Department will release US employment data for March on Friday.

Benchmark U.S. crude fell $4.98 to $102.84 a barrel in electronic trading on the New York Mercantile Exchange. It was down over $7 at one point. The contract rose $3.58 on Wednesday to $107.82.

Brent crude, the price basis for international oil trade, fell $4.21 to $107.23 a barrel in London.

Biden is preparing to order the release of up to 1 million barrels of oil a day from US reserves, according to two people familiar with the decision. That would almost close the US output gap from February 2020 before the coronavirus caused a sharp drop.

However, this offer is “simply not enough to offset Russian losses”, ING’s Francesco Pesole and Frantisek Taborsky said in a report. “It does not seem likely that US reserves will be able to structurally lower oil prices.”

The dollar rose to 121.97 yen from 121.78 yen on Wednesday. The euro fell to $1.1123 from $1.1159.

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