PrintGLOBAL MARKETS-Stocks climb as oil prices ease; flurry of central bank meetings on tap
BY Reuters | ECONOMIC | 11:21 AM EDT* Oil prices ease further after Bessent comments
* Central bank meetings eyed for inflation views
* US stocks higher, led by AI companies (Updates with open of US markets)
By Chuck Mikolajczak
NEW YORK, March 16 (Reuters) - Global stocks rallied on Monday after three straight sessions of declines as oil prices retreated, though the recent surge in crude prices is likely to alter the inflation outlook and cause most central banks to hold at their policy meetings this week.
Israel said it has detailed plans for at least three more weeks of war as its military pounded sites across Iran overnight, while Iranian drone attacks temporarily shut Dubai airport and hit a key oil facility in the United Arab Emirates.
U.S. President Donald Trump on Sunday called for a coalition of nations to help reopen the vital Strait of Hormuz, warning that the NATO alliance faces a "very bad" future if its members fail to come to Washington's aid.
Crude extended declines after Treasury Secretary Scott Bessent said that the U.S. was "fine" with some Iranian, Indian and Chinese ships going through the strait for now, adding that any action to alleviate higher prices would depend on how long the war on Iran lasts.
U.S. crude fell 5.19% to $93.60 a barrel and Brent fell to $100.56 per barrel, down 2.5% on the day. Both Brent and U.S. crude have surged nearly 40% in March.
This jump in oil prices and its potential to boost inflation has 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 U.S. Federal Reserve by the end of the year, and nearly 40 basis points of hikes from the European Central Bank, according to LSEG data.
On Wall Street, U.S. stocks were higher in the early stages
of trading, led by AI-linked names such as Nvidia
"If we had a very extended conflict (in the Middle East), there are certain aspects to the AI capex story that could be impeded if there wasn't enough energy, and if there wasn't enough delivery of the chips and everything that was needed," said Steve Edwards, senior investment strategist at Morgan Stanley Wealth Management.
The Dow Jones Industrial Average rose 534.46 points, or 1.15%, to 47,092.93, the S&P 500 was up 85.07 points, or 1.28%, to 6,717.14, and the Nasdaq Composite gained 330.43 points, or 1.49%, to 22,435.60.
MSCI's gauge of stocks across the globe rose 11.81 points, or 1.18%, to 1,011.02, and was on pace for its biggest daily percentage gain since February 6. The pan-European STOXX 600 index rose 0.79% and was on track to snap a three-session streak of declines.
Commerzbank's shares shot up about 9% after Italy's UniCredit launched a bid for an additional stake in the German lender.
ALL THE CENTRAL BANKS
Central banks in the U.S., Britain, euro zone, Japan, Australia, Canada, Switzerland and Sweden will this week all hold their first meetings since the start of the war, and investors will look for clues on how rising crude prices could impact the interest-rate path.
The sharp shifts in central bank expectations have led to large moves in government bonds.
The yield on the benchmark U.S. 10-year notes fell 5.9 basis points to 4.226%, though is still up about 27 bps for March, as market participants dialed back the timing and magnitude for expected rate cuts.
The U.S. 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.
Rate-sensitive, shorter-dated yields have seen sharper moves, and two-year German yields have risen 38 basis points, while the equivalent British gilt yield has surged 55 bps.
A cautiously steady outcome is expected from the other central bank meetings, excluding the Reserve Bank of Australia, which is seen as likely to raise its cash rate a quarter point to 4.1%, as it battles resurgent inflation at home.
The heightened volatility in markets has tended to benefit the U.S. dollar as a safe haven. The United States is also a net energy exporter, giving it a relative advantage over Europe and much of Asia, which are net importers.
But the dollar index, which measures the greenback against a basket of currencies, fell 0.48% to 99.86, after touching a 10-month high on Friday, with the euro up 0.68% at $1.1494.
(Reporting by Chuck Mikolajczak in New York, additional reporting by Wayne Cole in Sydney, Alun John in London, Johann M Cherian and Utkarsh Tushar Hathi in Bengaluru; Editing by Shri Navaratnam, Kate Mayberry, Thomas Derpinghaus and Pooja Desai)
