Business
Global stocks rise as oil steadies; focus shifts to Fed policy
Global equities advanced as oil gains cooled, while markets turned cautious ahead of major central bank policy announcements.
Global stocks advanced for a second consecutive session as oil prices moderated from earlier highs, while investors turned their attention to a busy week of central bank decisions, with the US Federal Reserve in focus.
Key highlights
- Global stocks rise for second straight session
- Oil prices remain elevated but off earlier highs
- Wall Street led by energy sector gains
- Investors shift focus to Fed policy decision
- Central banks face inflation risks from oil shock
Oil volatility keeps markets on edge
Oil prices remained elevated amid the ongoing Iran conflict, though gains cooled from earlier spikes.
US crude settled up 2.9% at $96.21 a barrel, while Brent rose 3.2% to $103.42, both retreating from intraday gains of around 5%.
The market continues to grapple with supply risks linked to Iranian attacks and disruptions in the Strait of Hormuz, even as some shipping activity resumes.
Wall Street gains led by energy stocks
US equities closed higher, with gains led by energy shares as oil prices stayed firm.
The S&P 500 rose 0.25%, the Nasdaq climbed 0.47%, and the Dow edged up slightly. The energy sector outperformed with a 1% gain.
Airline and travel stocks also advanced despite higher fuel costs, supported by strong demand outlooks flagged by major carriers.
Investors turn cautious ahead of Fed
Market focus has now shifted firmly to the Federal Reserve’s upcoming policy decision.
“The place where we could get in trouble is if the Fed views the oil shock as inflationary and responds with more hawkish policy,” said Ross Mayfield of Baird Private Wealth Management.
Investors are hoping the Fed will acknowledge the risks from higher oil prices while maintaining a measured policy stance.
Central banks face inflation dilemma
Rising oil prices are complicating the outlook for global central banks.
Markets have scaled back expectations for rate cuts in the United States, now pricing in about 26 basis points of easing by year-end, down sharply from earlier expectations.
At the same time, expectations for tightening in Europe have increased, reflecting concerns that higher energy costs could fuel inflation.
The Reserve Bank of Australia has already raised rates for a second straight month, warning of material inflation risks from the Iran conflict.
Global markets extend gains
MSCI’s global equity index rose 0.51%, marking its first back-to-back gains in three weeks.
European stocks also advanced, with the STOXX 600 gaining 0.67%, supported by energy and utility sectors.
Despite the recent rebound, markets remain cautious, with analysts warning that current trends could reflect expectations of a slowing global economy rather than sustained growth.
Currency and bond markets steady
Bond markets showed limited movement, though yields remain elevated for the month.
The US 10-year yield eased slightly but is still up significantly in March, while the two-year yield reflects shifting expectations around Fed policy.
The dollar index slipped modestly, while the euro strengthened and the Japanese yen held near key intervention levels.
What next?
All eyes are now on central bank decisions this week, particularly the Federal Reserve, for signals on how policymakers will respond to rising oil prices.
Markets will closely track whether the current oil shock translates into sustained inflation pressure, a key factor that could shape the global rate outlook.
FAQs
Q1: Why are global stocks rising?
Stocks are gaining as oil price increases moderate and investors position ahead of central bank decisions.
Q2: Why is the Federal Reserve important right now?
The Fed’s policy stance will influence how markets interpret inflation risks from rising oil prices.
Q3: How are oil prices affecting markets?
Higher oil prices raise inflation concerns, which can impact interest rates and economic growth.
Q4: What are markets expecting from central banks?
Most central banks are expected to remain cautious, with fewer rate cuts and a potential shift toward tighter policy if inflation rises.
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