LONDON: Global shares edged up on Monday as oil eased from six-month highs ahead of a week of central bank meetings and corporate earnings that will further test confidence in the AI boom.
The oil price was down around 2% to US$114.6 after reports that Qatari mediators were in Tehran on Sunday as part of an effort to de-escalate tensions in coordination with the US.
Brent futures LCOc1 jumped 6.2% last week to their highest weekly close since mid-2022 as Houthi attacks in Saudi Arabia stoked energy supply concerns.
The Houthi group in Yemen said on Monday it had attacked Saudi Arabia's East-West crude oil pumping stations and Riyadh airport, but there was no immediate confirmation from Riyadh.
MSCI's All-World index was last a touch higher on the day, having fallen nearly 1% last week, while in Europe, the STOXX 600 was up 0.4%, led by energy-sensitive stocks such as industrials.
Volatility was contained, given the wall of macroeconomic event risk this week, in the form of multiple central bank meetings and earnings from the AI hyperscalers.
"The combination is formidable: mega-cap earnings, AI funding concerns, global semiconductor results, five major central bank meetings and potentially market-moving inflation and growth data," Pepperstone head of research Chris Weston said.
"The danger isn't simply that markets move sharply. It's that one catalyst changes the interpretation of the next, creating feedback loops across equities, rates, FX and volatility," he said.
New Zealand's central bank is widely expected to raise rates on Wednesday. Markets assume the US Federal Reserve will stand pat, but they imply an 80% chance that it will pull the trigger in December. Much the same is priced in for the Bank of Japan and the European Central Bank.
A key reading on US core inflation should show cost pressures remained elevated at 3.1% in September, while the economy is forecast to have grown at a brisk 3.2% annualised pace thanks in part to furious spending on data centres.
"The Fed is set to skip raising rates at its October meeting but is likely to deliver a second hike in December," analysts at Goldman Sachs said in a note.
"The most important risk is that oil futures are above our forecasts, largely reflecting concerns about potential further conflict with Iran," they added. "The more extreme and long-lasting the energy shock becomes, the more Fed participants will worry that inflationary pressures could broaden."
On Wall Street, S&P 500 ESc1 and Nasdaq futures NQc1 gained 0.3%. Aside from the Fed, earnings are in store from Alphabet, Microsoft and Amazon, as one-third of S&P 500 companies report.
Yields on 10-year Treasuries were flat at 5%, below this month's peak of 5.36%.
In currency markets, the Japanese yen slipped, as the dollar gained 0.3% to trade around 157.28 yen, while the euro rose 0.1% to US$1.121 after France dodged a credit downgrade last week. French government bond yields were down 5 bps at 4.973%, below last week's peak above 5%.
Sterling held at US$1.3346 with Britain's new finance minister, John Healey, set to deliver his first budget on Wednesday against a backdrop of rising global borrowing costs and high energy prices due to the US-Israeli war on Iran.
Futures on the Brazilian real were down over 10% BRc1 at 0905 GMT after Brazilian President Luiz Inacio Lula da Silva won an unprecedented fourth term on Sunday, according to the country's electoral court.
Brazilian Senator Flavio Bolsonaro refused to concede and said he would seek the annulment of the runoff election.