(Sharecast News) – Banks and Big Oil paced gains on the FTSE 350 on Tuesday, even as investors braced for the U.S. central bank’s policy announcement the next day – against the backdrop of rising oil prices.
Worth noting, both developments were somewhat intertwined, especially in the very short-term.
“If the price of oil breaches $100 per barrel and the price of gasoline rises solidly above $4.00 a gallon and both remain above those levels for a while, they could trigger a renewed wage-price spiral and higher inflationary expectations;” said Ed Yardeni, president of Yardeni Research in a post to Linkedin the day before.
“That scenario would be reminiscent of the 1970s, when the first wave of inflation was followed by a second wave and both triggered recessions. That is not the scenario we consider most likely, but it is the risk to our happier outlook. It’s partly because of this risk that we’ve raised our subjective odds of this alternative scenario to 25%.
Expectations were that the Federal Reserve would stand pat on Wednesday, keeping the target range for the Fed funds rate at 5-25-5.5%.
However, it was expected to keep the door open to one last hike before the end of the year.
The Bank of England on the other hand was expected to go ahead and raise rates again during the next day.
Oil and Gas names meanwhile continued to benefit from crude oil’s slow grind towards $95 a barrel on the ICE, with many analysts anticipating that $100 was within reach.
For just how long prices would remain that high was a different matter with some analysts anticipating that rising production from outside OPEC+ would temper prices in 2024.
Top performing sectors so far today
Banks 3,662.55 +1.06%
Automobiles & Parts 1,725.79 +0.95%
Oil, Gas and Coal 9,009.76 +0.92%
Food Producers 6,786.94 +0.88%
Tobacco 29,729.47 +0.75%
Bottom performing sectors so far today
Personal Goods 28,808.21 -3.25%
Leisure Goods 26,444.42 -2.15%
Chemicals 9,104.77 -1.67%
Industrial Transportation 3,747.61 -1.25%
Industrial Engineering 13,710.17 -1.24%