Bumper profit from BP boosts global stocks

London — A bumper profit from oil giant BP helped lift European stocks on Tuesday, but the euro was pegged back as the head of the European Central Bank, Christine Lagarde, tried to rein in interest rate hike expectations.

Oil and mining shares were among the biggest gainers on the pan-European Stoxx 600, after FTSE-listed BP reported a $12.8bn annual profit, its highest in eight years, boosted by soaring gas and oil prices.

The earnings amount to $24,353 a minute — more than someone on minimum wages in major economies would earn in a year — and helped offset what had been a groggy session in Asia after Washington added 33 Chinese firms to a list that requires them to go through more procedures before shipping goods to the US.

Currency and bond market traders were still focused squarely on which central banks will hike their interest rates the fastest and furthest this year in response to the rapid rise in global inflation.

“Central banks globally have all engaged in a hawkish pivot,” said BlueBay Asset Management's David Riley. “As their tolerance for higher inflation persistently is less than previously signalled, we are shifting to a regime where there will be more macro volatility.”

Comments from ECB President Lagarde on Monday that there was no need at present for major monetary policy tightening weakened the euro for a second consecutive day and nudged down bond yields — a proxy for borrowing costs — for high-debt countries, such as Italy, Greece and Spain.

Italian government bonds outperformed, with the 10-year yield falling 2.5 basis points to 1.78% and the “spread”, or premium investors demand to buy a bond, between Italian and German 10-year yields narrowed to 155 basis points.

Wall Street futures were pointing to a rebound there later, after a fall on Monday when Meta, the firm formerly known as Facebook, suffered a further 5% decline.

Choppy China

Asia’s session had been volatile overnight. MSCI’s broadest index of Asia-Pacific shares ended flat overall, but blue chip Chinese stocks dropped to a 19-month low after big tech firms’ heavy losses and US export warnings on 33 new Chinese firms.

The prospect of global rates rising had pushed Japanese government bond yields up too, while those on benchmark 10-year US Treasuries briefly touched 1.96%.

Russia’s rouble hit a four-week high after lengthy talks between President Vladimir Putin and his French counterpart Emmanuel Macron maintained hopes that war in Ukraine will be avoided.

That helped oil come off Monday’s seven-year high of $94 on Monday, and it was trading around $92 before the resumption of indirect talks in Vienna later between the US and Iran, which may revive a nuclear agreement that could eventually allow more oil exports from the Opec producer.

A deal could allow more than 1-million barrels a day of Iranian oil, equal to more than 1% of global supply, back onto the market, though that was still a distant possibility.

Brent crude was down 73c, or 0.8%, at $91.96 a barrel. West Texas Intermediate crude fell 52cs, or 0.6%, to $90.80.

Eight rounds of indirect talks between Tehran and Washington since April have yet to result in an agreement on resuming the 2015 nuclear deal. Differences remain about the speed and scope of lifting sanctions on Tehran.

“Exports could resume swiftly if a nuclear deal is reached,” said Tamas Varga of broker PVM. “But it is a big ‘if’.”

Reuters