Key facts
- Stocks edged higher ahead of a week of major tech earnings.
- Benchmark Brent crude oil was flat at $88.3 a barrel.
- Oil prices fluctuated due to geopolitical tensions in the Gulf.
- Investors are focused on inflation implications of rising energy costs.
- Bond yields increased, with U.S. 10-year Treasury yields at 4.56% and German 2-year yields at a two-year high.
Global stocks saw a modest rise on Monday as investors navigated a busy week of corporate earnings, particularly in the technology sector, while keeping a close watch on oil price volatility and geopolitical developments in the Gulf. Benchmark Brent crude traded flat at $88.3 a barrel, having earlier surpassed $90 for the first time in over a month, influenced by conflicting reports regarding a Houthi naval blockade declaration against Saudi Arabia and mediation efforts to de-escalate regional tensions.
The stabilization in oil prices provided some support to equity markets, which had experienced a pullback last week, partly driven by a reversal in chip stocks. European tech stocks led the gains, with futures on the U.S. Nasdaq 100 and S&P 500 also rising. This week's earnings season, featuring major companies like Alphabet, Tesla, Intel, and IBM, is expected to either validate or challenge the year's gains, which have been significantly fueled by AI-related capital expenditure.
Market participants are also concerned about the inflationary impact of renewed energy cost increases, despite recent U.S. consumer price data surprising on the downside. Futures markets are pricing in at least one Federal Reserve rate hike by year-end, and benchmark 10-year Treasury yields rose to 4.56%, with 30-year yields climbing back above 5.0%. In Europe, money markets anticipate further tightening from the European Central Bank, with German 2-year yields reaching a two-year high. European natural gas prices also hit a four-month peak.
Currency markets remained largely stable, though sterling showed some movement against the euro and dollar. Precious metals were muted, with gold trading flat.