The Brent oil price reached nearly $107 a barrel Monday after Yemen’s Iran-backed Houthi movement launched strikes on Saudi Arabia, heightening worries about tight global supplies heading into the northern hemisphere winter.
Doubts surrounding US President Donald Trump’s claim of an “energy ceasefire” between Ukraine and Russia, following his surprise announcement of a deal to buy diesel from Moscow, further unsettled investors.
After a mixed showing for stocks across Asia, Europe’s main indices rose in afternoon deals, with the car sector lifted by a deal to limit Chinese imports of hybrids as part of an effort to avert a trade war.
Wall Street’s main indices opened mixed, with the tech-heavy Nasdaq Composite slipping after reaching record highs last week.
The dollar was higher against most currencies ahead of key US inflation data this week, which investors will look at through the prism of whether it will push the Federal Reserve to raise interest rates again in a bid to tame elevated inflation.
“Oil remains well bid above $100 after strikes on Saudi Arabia’s Riyadh airport over the weekend, whilst efforts to secure a Russia-Ukraine energy truce were muddy,” said Neil Wilson, a strategist at Saxo UK.
Meanwhile, “a US deal to purchase some Russian diesel is a drop in the ocean”, he added.
Russia on Monday refused to say whether an agreement had been reached with Ukraine to halt attacks on energy infrastructure, a day after Trump sowed confusion with his unilateral announcement of an “energy ceasefire”.
Trump also called for Ukraine to “get a new leader” after Volodymyr Zelensky slammed Washington’s easing of Russian diesel sanctions, as the US president grapples with high fuel prices ahead of midterm elections in the world’s biggest economy.
Saudi Arabia’s energy minister acknowledged meanwhile that the kingdom’s infrastructure and resilience had been tested following a wave of deadly attacks by Yemen’s Houthis.
The weekend strikes marked a sharp escalation in the Yemen war, where Saudi Arabia has long supported the internationally recognised government.
Also in view this week is the start of the corporate earnings season, with US banking giants JP Morgan, Goldman Sachs and Bank of America due to report on Tuesday.
Tech giants will follow later in October and November, with traders keen to get an idea on the outlook for the AI sector as it invests vast sums despite growing concerns over the technology.
“Rising Treasury yields, higher interest rates and persistent inflation are raising the bar for companies to deliver strong results,” said eToro US investment analyst Bret Kenwell.
“Banks and credit card companies will offer an important read on household finances, particularly as inflation continues to outpace wage growth,” he added.
Meanwhile, investors will be looking at results of tech firms to gauge the durability of the AI investment cycle.
Kenwell said analysts are expecting earnings growth of 24.4 percent and revenue growth of 16.5 percent for this quarter.
– Key figures at around 1330 GMT –
Brent North Sea crude: UP 2.0 percent at $106.83 per barrel
West Texas intermediate: UP 1.8 percent at $93.54 per barrel
New York – Dow: UP 0.2 percent at 51,743.40 points
New York – S&P 500: UP less than 0.1 percent at 7,814.80
New York – Nasdaq Composite: DOWN less than 0.1 percent at 27,350.29
London – FTSE 100: UP 0.8 percent at 10,631.00
Paris – CAC 40: UP 0.2 percent at 7,820.75
Frankfurt – DAX: UP 0.7 percent at 25,262.89
Hong Kong – Hang Seng Index: UP 0.3 percent at 24,271.20 (close)
Shanghai – Composite: DOWN 0.4 percent at 3,794.60 (close)
Tokyo – Nikkei 225: Closed for a holiday
Euro/dollar: DOWN at $1.1181 from $1.1203 on Friday
Pound/dollar: DOWN at $1.3231 from $1.3240
Dollar/yen: UP at 158.62 yen from 158.27 yen
Euro/pound: DOWN at 84.48 pence from 84.62 pence
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