Brent oil futures looked set for its biggest daily percentage gain in around a year, jumping 5.3% to $84.12 a barrel on news Opec+ would aim to cut output by around 1.16-million barrels per day. US crude climbed 5.75% to $79.99.
“It’s simply indicative of the global economy slowing, which is not necessarily bad news as it’s mainly a self-inflicted slowdown caused by the US and Europe to make sure that inflation is brought closer to target.” Energy-sensitive stocks dropped, British Airways parent IAG fell 1.5%, while tech shares, which struggle in a higher rate environment, also lost some ground, as markets saw higher oil prices leading to sticker inflation, and, in turn higher-for-longer interest rates.
S&P 500 futures slipped 0.2% on Monday, while Nasdaq futures lost 0.7%. MSCI’s broadest index of Asia Pacific shares outside Japan lost 0.25%, weighed with tech heavier benchmarks like Hong Kong and Korea underperforming.Opec+’s move was also playing out in currency and rate markets, as, said ING FX strategist Francesco Pesole, it had “fuelled fears that inflation will prove to be a longer-lasting problem for central banks.
The market nudged up the probability of the Federal Reserve hiking rates by a quarter point in May to 61% from a probability of 48% on Friday, and had 38 basis points of cuts priced in by year-end.