Oil Prices Rise as Global Markets Show Gains

Global Markets React to Ongoing Gulf Conflict

Benchmark oil prices continued their upward trend on Monday as investors focused on the ongoing Gulf conflict, which they fear will drive inflation and raise the risk of recession across the globe. In a choppy trading session, major Wall Street indices and European shares advanced, while investors grew increasingly uneasy about the war entering its fifth week with no clear path to resolution.

US Treasury Prices Rise Amid Global Growth Concerns

In the US, Treasury prices rose, with yields declining across the curve as mounting global growth concerns eclipsed inflation worries. The US Treasury's benchmark 10-year notes saw their yield fall 9.4 basis points to 4.346%. Meanwhile, the 2-year note yield, which typically moves in step with Fed interest rate expectations, fell 8.4 basis points to 3.832%.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Oil Prices Surge to New Highs

Crude oil prices continued their ascent, with Brent crude futures rising to $113.17 per barrel, up 0.53% on the day. US crude prices surged 3.41% to $103.04. The surge in oil prices has sent shockwaves through the global economy, with prices for oil, gas, fertiliser, plastic, and aluminium surging along with fuel for planes and shipping.

Global Markets React to Conflict

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

On Wall Street, the Dow Jones Industrial Average rose 0.34% to 45,322.44, while the S&P 500 retreated 0.21% to 6,354.87 and the Nasdaq Composite fell 0.55% to 20,832.24. In Europe, the pan-European STOXX 600 rose, and Europe's broad FTSEurofirst 300 index also advanced.

FED in Focus as Payrolls Loom

Data on US retail sales, manufacturing, and payrolls this week will provide an update on how the economy is faring. The Federal Reserve, led by Chair Jerome Powell, has indicated that it will wait to see how the Iran war affects the economy and inflation, noting that policymakers typically look through shocks such as those from higher oil prices.

Dollar Strengthens Amid Volatility

The US dollar strengthened amid heightened volatility in markets, with the dollar index rising 0.15% to 100.46. Spot gold rose 0.56% to $4,517.54 an ounce, and futures settled 0.7% higher at $4,557.50.