Oil Rebounds as Dollar Slips, Stocks Mixed

Crude oil whipsawed while the dollar weakened as the British pound rebounded. Stocks were mixed before an expected interest-rate hike by Federal Reserve policy makers.

Oil jumped above $48 a barrel as a reported decline in U.S. crude stockpiles countered a boost in output from Saudi Arabia, reversing a plunge of as much as 2.7 percent. The pound recovered Tuesday’s losses tied to Brexit concerns. Hong Kong shares briefly pared declines as Chinese Premier Li Keqiang played down the risk of a trade conflict with the U.S. The yield on 10-year Treasuries remained near 2.6 percent.

The swings in oil added some drama to financial markets amid central bank decisions, European political drama and a raft of economic data that could set the tone for financial markets for weeks to come. With the Fed all but certain to raise rates, investors have been weighing how oil’s precarious level and looming inflation readings could impact the central bank’s path for future moves.

Volatility is rising this week, with the VIX in the U.S. jumping the most in a month on Tuesday, while a gauge for the Nikkei 225 climbed for a fourth straight day. Elections remain a wild card for investors. Wednesday’s vote in the Netherlands will deliver a reading on the state of populism in Europe as races in France and Germany heat up.

U.S. trading was more muted than normal on Tuesday as a late-winter storm blanketed the eastern part of the country in snow. Airlines cancelled thousands of flights, wholesale power prices surged and natural gas futures gained as the storm spun up the Atlantic Coast.

Here are the main market moves:

Commodities

· West Texas Intermediate crude gained 1.5 percent to $48.45 as of 4:07 p.m. in Tokyo. U.S. inventories fell by 531,000 barrels last week, the industry-funded American Petroleum Institute was said to report. Oil lost 1.4 percent Tuesday, touching a low of $47.09, after an OPEC report showed Saudi Arabia’s production climbed back above 10 million barrels a day in February.

· Gold climbed 0.4 percent to $1,203.94 an ounce after falling 0.4 percent Tuesday.

· Iron ore jumped 5.2 percent, adding to a 4.3 percent advance in the previous session.

Currencies

· The British pound jumped, increasing 0.6 percent to $1.2226, after sliding 0.5 percent Tuesday. The European Union is considering forcing the U.K. to wait until June for formal negotiations to begin on the terms of Brexit, eroding the time Prime Minister Theresa May has to land a deal, according to EU officials.

· The Bloomberg Dollar Spot Index fell 0.2 percent after climbing 0.3 percent the day before. The South Korean won and the Taiwanese dollar rose at least 0.4 percent.

· The yen added 0.1 percent to 114.64 per dollar, after being the only major currency to gain against the greenback Tuesday.

Stocks

· Japan’s Topix index fell 0.2 percent while South Korea’s Kospi was little changed. New Zealand’s S&P/NZX 50 declined 0.6 percent and Singapore’s Straits Times Index lost 0.4 percent.

· Australia’s S&P/ASX 200 Index rose 0.3 percent, reversing an earlier drop of as much as 0.6 percent as raw-materials shares rebounded.

· Hong Kong’s Hang Seng dropped 0.3 percent and the Hang Seng China Enterprises Index lost 0.5 percent, with both paring earlier declines of more than 0.7 percent. Li said at a press conference after the close of the annual National People’s Congress that it’s important for both China and the U.S. to keep talking to build trust, and that China doesn’t want to see a trade war.

· Futures on the S&P 500 added 0.1 percent. The benchmark index slipped 0.3 percent on Tuesday, while the Stoxx Europe 600 Index fell by the same degree.

Bonds

· The yield on 10-year Treasury notes fell one basis point to 2.59, after slipping three basis points in Tuesday trading. The equivalent Australian rate was little changed at 2.92 percent.

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