Central Bank Decisions Weigh on Global Markets as Brent Crude Tops $95

Global stock markets faced a tumultuous start to the week as traders braced themselves for a pivotal series of central bank decisions.

Benchmark Brent crude oil took the spotlight, surging past the $95 per barrel price for the first time since November amid rising global inflation.

While European oil giants TotalEnergies SE, BP Plc, and Shell Plc outperformed expectations, Europe’s Stoxx 600 index relinquished its earlier gains, and US equity futures hovered around equilibrium.

The meteoric rise in crude prices, driven by Saudi Arabia and Russia’s supply constraints, has exacerbated the challenges faced by central bankers. Their struggle lies in taming inflation while safeguarding their economies.

The Federal Reserve is set to announce its policy on Wednesday followed by the Bank of England on Thursday and the Bank of Japan on Friday.

According to David Kalfon, CEO of Sanso Investment Solutions, “Central banks have performed well so far, but their maneuvering space is limited. From the outset, their priority has been conquering inflation, not fostering growth.”

US Treasury yields edged higher, while the dollar’s strength waned slightly.

The prospect of prolonged higher interest rates has cast a shadow over the tech sector, which had led the US stock market rally earlier this year. Citigroup Inc. strategists noted that investor flows indicate a growing inclination toward bearish sentiment in the Nasdaq 100, with more short bets than long positions.

This suggests that “few investors are comfortable betting on a near-term reversal for the growth/tech-related index,” as the Nasdaq 100 remains down approximately 3.9% from its peak on July 18.

As central banks make critical decisions this week, global markets will remain on edge, closely watching for their strategies to address inflation and its impact on various sectors.