LONDON- A surge in oil prices to $93 per barrel as well as robust US jobs data weighed on stock prices Friday as they fuelled expectations central banks will move forcefully to raise interest rates.
Oil prices struck seven-year highs as traders bet on continued improvement in demand thanks to the economic reopening, and with the United States hit by a cold snap.
Lingering worries over Ukraine-Russia tensions were also playing a key role in the spike, with analysts predicting $100 could be breached soon.
But high oil prices would push inflation even higher, with central banks already under pressure to raise interest rates.
US data released Friday showed the US economy added 467,000 jobs in January, far more than had been expected given the renewed onslaught of Covid-19 infections caused by the Omicron variant.
“The key takeaway from the report is that it will inflame concerns about the Fed being behind the curve in fighting inflation,” said analyst Patrick J. O’Hare.
The US Federal Reserve is expected to begin raising interest rates next month, but more analysts are expecting it may do so more aggressively, by moving ahead with a half percentage point hike rather than a quarter point increase.
On Wall Street, both the Dow and S&P 500 were lower in late morning trading. But the tech-heavy Nasdaq was higher thanks to better-than-expected earnings reports from Amazon, Snap and Pinterest.
Shares in Amazon jumped more than 12 percent as the company reported revenues jumped 9 percent to $137.4 billion in the fourth quarter.
“The next couple of months should be very choppy for equity markets as Fed tightening certainty will clearly take a cue from how quickly supply chain issues improve,” said market analyst Edward Moya at trading platform Oanda.
“The Fed clearly is rushing to fix their mistake in tackling inflation and that surging global bond yield environment will make it tough for risky assets,” he added. 
Meanwhile, stocks were lower in Europe, where the European Central Bank’s apparent shift in its outlook towards lifting rates this year itself stunned investors Thursday.
ECB chief Christine Lagarde had for months said inflationary pressures would be temporary and dissipate as the world economy reopens and supply chains resume — allowing the bank to keep rates ultra-low this year.
But a record jump in eurozone prices last month and no sign of them easing has forced her to re-evaluate, saying the “situation had indeed changed”.
The news boosted the euro — the single currency recording a weekly gain of nearly three percent against the dollar. 
But an ECB board member, French central bank chief Francois Villeroy de Galhau, warned against making predictions. 
“If the direction of our trajectory is clear, no one should jump to conclusions about its time,” he said.