Oil rises while dollar gains on expectations of higher US rates

what happened

According to Newsmetry API, oil prices rose on Monday after attacks on Saudi Arabia outweighed expectations of improved supply. The dollar also advanced as investors anticipated that elevated energy costs would push the Federal Reserve toward higher interest rates to contain inflation. The US currency has additionally benefited from stronger economic growth in the United States than in other advanced economies.

Markets were cautiously awaiting September inflation figures and the start of the quarterly earnings season on Tuesday. JPMorgan and Goldman Sachs are scheduled to report that day, followed by Bank of America on Wednesday. US Treasury yields reached 24-year highs this month, adding to concerns that inflation could remain elevated and weigh on equity valuations.

By Monday afternoon, the Dow Jones Industrial Average was up 0.3%, while the S&P 500 fell 0.2% and the Nasdaq declined 0.5%. MSCI’s global stock gauge dropped 0.15%, while the STOXX 600 gained 0.61%. US crude rose 1.9% to $93.55 a barrel and Brent gained 1.7% to $106.52. The dollar index climbed 0.4% to 102.59; the euro fell to $1.1175 and the dollar rose to 158.66 yen. Spot gold declined 0.62% to $4,167.98 an ounce.

why it matters

Markets are weighing higher oil costs, renewed inflation risks and the prospect of tighter Federal Reserve policy. The combination supports the dollar while challenging bonds and equities.

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