Global equities rose on Monday as oil prices fell from a six-month high and U.S. bond rates surged to their highest since late November as investors reduced Federal Reserve interest rate wagers.
After sliding 1.2% the week before, Europe's STOXX 600 index (.STOXX) up 0.05% in early trade, Germany's DAX (.GDAXI) rose 0.38%, and Britain's FTSE 100 (.FTSE) fell 0.19%. S&P 500 futures MESC1> dropped 0.2% after falling 0.9% last week, and Nasdaq futures (.NQcv1) fell similarly.
Stock markets started the second quarter poorly as oil prices rose on concerns about a wider Middle East conflict. Investor concerns regarding central banks' borrowing cost reduction have increased due to strong U.S. economic statistics.
After Israel withdrew more soldiers from southern Gaza, oil prices dipped on Monday as geopolitical tensions relaxed. Egyptian state-affiliated Al-Qahera News TV stated that truce talks in Cairo are progressing and that all sides have agreed on key points.
Brent crude fell 1.1% to $90.20 a barrel. Last week, a suspected Israeli attack on Iran's embassy in Syria sent prices to a six-month high of $91.91. "The price remains elevated overall and with tighter supply globally, there isn't an immediate catalyst for price to loosen," said Hargreaves Lansdown lead equities analyst Sophie Lund-Yates.
Monday's 10-year U.S. Treasury yields rose 7 basis points to 4.45%, their highest since late November, as rates are expected to stay higher. "The resilience of the U.S. labor market calls the June cut into question," said Jefferies head Europe economist Mohit Kumar.
After inflation fell more than expected to 2.4% in March, investors expect the European Central Bank to lower rates in June on Thursday. The dollar index held at 104.33. The dollar rose 0.2% and was at its best level since 1994 at 151.89 yen, keeping traders nervous about Japanese intervention.
After prolonged holidays from Thursday, China mainland equities resumed 0.88% lower with the blue-chip gauge (.CSI300). Hong Kong's Hang Seng Index (.HIS) rose 0.07% and Japan's Nikkei 225 (.N225) rose 0.91%.
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