LONDON (Reuters)

World shares struggled to extend a bounce off four-week lows on Tuesday (June 22), oil prices were at their highest in well over two years, while indecisive bond markets flip-flopped on inflation and interest rate moves.

Europe’s STOXX 600 had given back its early gains as falls in technology and healthcare stocks – the main winners from the COVID pandemic – offset a modestly higher UK FTSE with its army of oil and mining firms.

Wall Street’s open also looked like being subdued after a jump on Monday, and government bond prices were choppy as fixed-income investors continued to adjust to last week’s US Federal Reserve shift, when policymakers pulled forward rate hike forecasts.

All eyes are on Fed chief Jerome Powell who appears before US Congress from 1800 GMT, although investors were also starting to square up positions ahead of the start of the second half of the year next week.

“I’m not sure anyone really knows what this move by the Fed really means at the moment,” said CMC Markets senior strategist Michael Hewson.

“I’m not sure it’s changed a damn thing. The Fed is going to taper its purchases … it’s just about finessing that message.”

It was not affecting oil markets. Brent crude prices hit US$75 a barrel for the first time since April 2019 as traders remained bullish about a quick recovery in global oil demand as economies reopen.

Brent drifted back slightly in London but had gained 1.9 per cent the previous day and U.S. WTI crude had jumped 2.8 per cent.

Both benchmarks are up nearly 50 per cent this year and have now risen for the past four weeks on optimism over the pace of global COVID-19 vaccinations and expected pick-up in summer travel.

MSCI’s broadest index of Asia shares had advanced 0.8 per cent overnight, moving above Monday’s four-week lows and notching a four per cent gain so far this year.

Japan’s Nikkei led the way, rallied 3.1 per cent as shipping firms soared 10 per cent to a 10-year high. South Korea stocks rose 0.7 per cent, Australia put on 1.6 per cent and Chinese stocks closed up 0.8 per cent.

“The reopening trade is still something we are looking for in the second half of the year,” said Eric Theoret, global macro strategist at Manulife Investment Management. He added Europe would see the most benefit, followed by emerging markets.