Volkswacht Bodensee - Stocks diverge while oil gains tracking soaring inflation

US annual consumer inflation hit a 40-year high in March, the same month that UK prices jumped at the fastest pace in three decades.

Global inflation, already rocketing on supply constraints as economies look to fully reopen following pandemic lockdowns, is rising further on fallout from the Ukraine war.

US wholesale price inflation hit a record annual rate of 11.2 percent in the year to March, according to data released Wednesday.

Analysts said markets welcomed an indication that US inflation was approaching its peak, though it has raised expectations that the Federal Reserve will take more aggressive action to contain prices.

"The steepest rises in a generation have unsettled financial markets, as investors digest the unsavoury prospect of tougher hikes in interest rates," noted Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

Tokyo shrugged off the gloom, however, with the benchmark Nikkei 225 closing almost two percent higher following sharp losses at the start of the week.

In China, where a Covid-19 outbreak has caused mass lockdowns and snarled global trade arteries, the main stock market index lost close to one percent Wednesday.

That came as official data showed China's imports shrank on-year in March for the first time in nearly two years, hit by the coronavirus and weakening consumer demand.

European stocks were solidly lower in afternoon trading while Wall Street opened little changed as the corporate reporting season got underway.

JPMorgan Chase saw its first quarter net profit plunge by 40 percent as it set $900 million aside to deal with potential losses due to the Ukraine conflict and inflation.

It already booked $524 million in losses as it sought to lower its exposure to soaring commodities prices and Russian counterparties.

Shares in JPMorgan Chase fell 2.8 percent at the open of trading.

Meanwhile, Delta airlines beat expectations even if it still lost money and said it expects second quarter revenue to come in at 97 percent of the pre-pandemic level in 2019.

Its shares rose 3.8 percent.

- Oil rises -

Elsewhere Wednesday, oil prices climbed further in a volatile trading week.

"Oil seems to be the primary benefactor of (the) Ukraine vs Russia conflict dragging out longer," noted Stephen Innes of SPI Asset Management.

Russia is a major producer of oil and gas and the war has triggered fears of supply constraints.

However, global oil demand will be slightly lower than forecast this year in the wake of strict Covid lockdowns in China, the world's biggest importer of crude, the International Energy Agency said Wednesday.

Russian oil supply is expected to continue to fall in April by 1.5 million barrels per day, according to the IEA, which advises developed countries on their energy policies.

In currency trading Wednesday, the yen hit its lowest level against the dollar in two decades, extending recent falls as the gap widens between Japan's ultra-loose monetary policy and Fed tightening.

Despite being traditionally considered a haven currency, uncertainty fuelled by the war in Ukraine has not caused the yen to strengthen.

Instead, the Fed's move towards a more aggressive rate-tightening policy and the shock of rising oil prices in Japan -- a major importer of fossil fuels -- have pushed the currency lower, analysts said.

- Key figures around 1330 GMT -

London - FTSE 100: DOWN 0.2 percent at 7,561.85 points

Paris - CAC 40: DOWN 0.7 percent at 6,491.70

Frankfurt - DAX: DOWN 1.0 percent at 13,987.03

EURO STOXX 50: DOWN 0.9 percent at 3,795.76

New York - Dow: UP 0.1 percent at 34,260.43

Tokyo - Nikkei 225: UP 1.9 percent at 26,843.49 (close)

Hong Kong - Hang Seng Index: UP 0.3 percent at 21,374.37 (close)

Shanghai - Composite: DOWN 0.8 percent at 3,186.82 (close)

Brent North Sea crude: UP 2.1 percent at $106.84 per barrel

West Texas Intermediate: UP 1.9 percent at $102.46 per barrel

Euro/dollar: DOWN at $1.0815 from $1.0818

Pound/dollar: UP at $1.2996 from $1.2977

Euro/pound: DOWN at 83.21 pence from 83.36 pence

Dollar/yen: DOWN at 125.80 from 126.22 yen

burs-rl/lth

C.Kovalenko--BTB