Stocks, bonds cautious ahead of ‘formidable’ week for risk
The oil price was down around 2% to US$114.6 after reports that Qatari mediators were in Tehran on Sunday as part of an effort to de-escalate tensions in coordination with the US.
Global shares showed modest gains on Monday as oil prices slipped from six-month highs ahead of a week packed with central bank meetings and corporate earnings that will put pressure on confidence in the AI boom. Brent futures LCOc1 climbed 6.2% last week to their highest weekly close since mid-2022 due to Houthi attacks in Saudi Arabia that raised concerns about energy supply.
The Houthi group in Yemen claimed to have attacked Saudi Arabia's East-West crude oil pumping stations and Riyadh airport, though Riyadh had not yet confirmed the incidents. MSCI's All-World index edged up slightly, while Europe's STOXX 600 rose 0.4%, driven by energy-sensitive stocks such as industrials. Despite the volatility being limited due to the multitude of macroeconomic risks looming, such as central bank meetings and AI funding concerns, Chris Weston, head of research at Pepperstone, warned that the true test lies in the potential feedback loops that could affect equities, rates, foreign exchange, and volatility.
Economic indicators are expected to be released, with New Zealand's central bank likely to raise rates on Wednesday, while the US Federal Reserve is anticipated to maintain rates but may reduce them in December. The Bank of Japan and the European Central Bank are also expected to keep rates steady. US core inflation is forecast to stay elevated at 3.1% in September, with the economy expanding at a robust 3.2% annualized pace, driven by robust spending on data centers.
The Federal Reserve is expected to skip a rate hike at its October meeting but may increase rates in December, according to Goldman Sachs analysts. The main risk is an oil price that exceeds forecasts, mainly due to concerns of further conflict with Iran. S&P 500 and Nasdaq futures rose 0.3%, with major tech companies like Alphabet, Microsoft, and Amazon set to report earnings.
US 10-year Treasury yields remained steady at 5%, falling below this month's peak of 5.36%. Meanwhile, the Japanese yen weakened as the dollar gained 0.3% to trade near 157.28 yen, and the euro edged up 0.1% to US$1.121 after France avoided a credit downgrade last week. Sterling remained stable at US$1.3346, as Britain's new finance minister, John Healey, was scheduled to present his first budget on Wednesday amidst mounting global borrowing costs and energy prices fueled by the US-Israeli war on Iran.
Brazilian real futures fell over 10% after Lula da Silva secured an unprecedented fourth term in the country's electoral court, while Senator Flavio Bolsonaro refused to accept the runoff election result.
Written by urgent.news from Free Malaysia Today's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
