Global Markets Rally as Oil Prices Ease

Key Figures:

• $93.65: US crude oil price
• $100.28: Brent oil price
• 342.00: Dow Jones Industrial Average gain
• 46,900.47: Dow Jones Industrial Average closing price
• 65.24: S&P 500 gain
• 6,697.43: S&P 500 closing price
• 273.44: Nasdaq Composite gain
• 22,378.46: Nasdaq Composite closing price
• 10.97: MSCI's gauge of stocks across the globe gain
• 1,010.13: MSCI's gauge of stocks across the globe closing price

Global stocks rallied on Monday as oil prices pulled back, though a previous surge in crude prices is likely to sway the inflation outlook and cause most central banks to hold rates steady at their policy meetings this week.

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

The Dow Jones Industrial Average rose 0.73% to 46,900.47, while the S&P 500 climbed 0.98% to 6,697.43. The Nasdaq Composite jumped 1.24% to 22,378.46, with AI-linked names such as Nvidia and Meta Platforms leading the gains.

US crude fell 5.13% to $93.65 a barrel and Brent fell to $100.28 per barrel, down 2.77% on the day. Both Brent and US crude have surged nearly 40% in March.

The jump in oil prices and its potential to boost inflation have led markets to recalibrate expectations for easing policies from global central banks this year. Markets are currently pricing in about 25 basis points of cuts from the US Federal Reserve by the end of the year, and nearly 40 basis points of hikes from the European Central Bank.

Central banks in the US, Britain, euro zone, Japan, Australia, Canada, Switzerland, and Sweden will this week hold their first meetings since the start of the Iran war, and investors will look for clues on how rising crude prices could impact the interest-rate path.

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

The yield on the benchmark US 10-year notes dropped 6.1 basis points to 4.224%, though it is still up about 26 bps for March, as market participants dialed back the timing and magnitude for expected rate cuts. The US Fed is largely expected to hold rates steady at its policy announcement on Wednesday, and policymakers are more likely to strike a cautious if not outright hawkish tone this week due to the current oil shock.