Oil Prices Surge as U.S. Stock Futures Struggle While Asian Markets Gain

The financial markets started the week on a volatile note as oil prices surged, U.S. stock futures declined, and Asian markets saw significant gains. Investors are closely monitoring global economic conditions, particularly as key central banks, including the U.S. Federal Reserve, are set to hold policy meetings this week.

Oil prices spiked on Monday following fresh geopolitical tensions. U.S. Defense Secretary Lloyd Austin stated over the weekend that the U.S. would continue military actions against Yemen’s Houthi rebels until their attacks on shipping routes ceased.

This announcement triggered concerns over potential disruptions in global oil supply, causing a sharp rise in crude prices. Brent crude futures climbed 1.06%, reaching $71.33 per barrel, while U.S. West Texas Intermediate (WTI) crude saw a similar increase of 1.12%, trading at $67.94 per barrel.

“We’re witnessing a resurgence of geopolitical risks,” said Tony Sycamore, a market analyst at IG. “If crude oil moves past the $68.50 mark, we could see significant short covering in the market.”

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In addition to geopolitical developments, growing optimism surrounding China’s economic recovery further supported oil prices. Over the weekend, Beijing unveiled a series of measures aimed at boosting domestic consumption. These initiatives include increasing household incomes and introducing childcare subsidies to encourage spending.

China’s State Council also announced plans to ease consumer credit quotas and loan terms, signaling long-term financial backing for economic recovery. Analysts believe this could have a meaningful impact on consumer behavior.

“In our view, the government’s focus is on increasing both the capacity and willingness of households to spend,” said Lynn Song, ING’s chief economist for Greater China. “With these policy moves and last year’s low base, we anticipate mid-single-digit consumption growth in 2025.”

Investors are now awaiting further details from Chinese officials, with a press conference scheduled later in the day to outline additional consumption-boosting measures.

China’s latest economic data painted a mixed picture. Official figures showed a stronger-than-expected 5.9% growth in industrial output for the first two months of the year, yet the struggling property sector remains a drag on the economy. Despite these numbers, market reactions were relatively muted.

The CSI300 blue-chip index reversed early gains, slipping 0.07%, while the Shanghai Composite Index remained up 0.28%. Meanwhile, Hong Kong’s Hang Seng Index surged more than 0.8%, helping to push MSCI’s broad index of Asia-Pacific shares (excluding Japan) 1% higher, reaching a one-week peak.

The Chinese yuan saw a slight uptick, with its onshore value rising 0.2% to 7.2265 per U.S. dollar and its offshore counterpart gaining 0.17% to 7.2268. This comes as global investors keep a close eye on the U.S. Federal Reserve’s upcoming policy meeting, where interest rates are expected to remain unchanged.

As the week unfolds, market participants will be paying close attention to global economic policy decisions, particularly from the Federal Reserve, as well as further updates on China’s economic stimulus efforts.