Morning Chronicle - US stocks fall on latest hot inflation report; oil prices rise

The consumer price index surged 8.5 percent in March compared with a year ago, the biggest jump since December 1981. CPI climbed 1.2 percent over February's level.

The report was the first to fully encompass the shock caused by Russia's invasion of Ukraine and Western sanctions against Moscow, which have caused energy and food prices to spike worldwide.

Higher prices for food, shelter and fuel are "likely forcing some people to do without," said economist Joel Naroff.

Though the Federal Reserve is poised to raise interest rates quickly to tamp down inflation pressures, the effects would not be immediate.

"Inflation should moderate, if only because some of the biggest increases are behind us. But there is a difference between decelerating and low," Naroff said.

"Since monetary (policy) works with a lag, don’t expect major progress on the inflation front even if the Fed acts aggressively."

US equities initially climbed on the inflation data, with some analysts appearing to view the report as corroborating "peak inflation" narrative based on the idea that pricing pressures will soon ease.

But stocks lost steam later in the session, with the S&P 500 finishing 0.3 percent lower. Some analysts pointed to nervousness heading into the earnings season.

Shares of large banks fell more than one percent ahead of quarterly results, which kick off Wednesday morning with JPMorgan Chase.

Analysts expect banks to report lower earnings compared with last year, when profits from were lifted by the release of funds set aside early in the pandemic in case of bad loans.

Meanwhile, European markets fell, with London's FTSE 100 ending the day down 0.6 percent. Frankfurt off 0.5 percent and Paris shedding 0.3 percent.

Oil prices advanced more than six percent, lifting US benchmark West Texas Intermediate back above $100 a barrel.

"The crude correction ended now that the market has mostly priced in the strategic petroleum release plan, China is beginning to lift some of their lockdowns and as negotiations between Russia and Ukraine appear to have hit a dead-end," said Oanda's Edward Moya.

"The energy market expects to remain very tight from the summer and if geopolitical risks remain elevated, $100 oil should easily hold."

- Key figures around 2040 GMT -

New York - Dow: DOWN 0.3 percent at 34,220.36 (close)

New York - S&P 500: DOWN 0.3 percent at 4,397.45 (close)

New York - Nasdaq: DOWN 0.3 percent at 13,371.57 (close)

London - FTSE 100: DOWN 0.6 percent at 7,576.66 (close)

Paris - CAC 40: DOWN 0.3 percent at 6,537.41 (close)

Frankfurt - DAX: DOWN 0.5 percent at 14,124.95 (close)

EURO STOXX 50: DOWN 0.2 percent at 3,831.47 (close)

Tokyo - Nikkei 225: DOWN 1.8 percent at 26,334.98 (close)

Hong Kong - Hang Seng Index: UP 0.5 percent at 21,319.13 (close)

Shanghai - Composite: UP 1.5 percent at 3,213.33 (close)

Brent North Sea crude: UP 6.3 percent at $104.64 per barrel

West Texas Intermediate: UP 6.7 percent at $100.60 per barrel

Euro/dollar: DOWN at $1.0832 from $1.0884 late Monday

Dollar/yen: DOWN at 125.33 yen from 125.37 yen

Pound/dollar: DOWN at $1.3002 from $1.3030

Euro/pound: DOWN at 83.28 pence from 83.53 pence

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P.J.Cole--MC-UK