- Energy stocks gained due to unexpected reductions in the OPEC+ group’s oil production targets.
- The possibility of higher oil prices exacerbated inflation concerns.
- Interest rate futures indicate a 56% chance that the Fed will increase rates by 25bps.
US equities ended the day higher on Monday thanks to gains in energy stocks due to unexpected reductions in the OPEC+ group’s oil production targets. Tesla, however, fell after disappointing investors with its first-quarter electric vehicle deliveries.
Tesla Inc. fell 6.1% after revealing that deliveries for the March quarter increased just 4% from the previous period. Even though CEO Elon Musk reduced vehicle prices in January to increase demand.
The S&P 500 energy sector index increased by 4.9% after Saudi Arabia and other OPEC+ oil producers unveiled unexpected production cuts. These cuts may cause oil prices to reach $100 per barrel.
The possibility of higher oil prices exacerbated inflation concerns on Wall Street just days after data showing a drop in inflation increased hopes that the US Federal Reserve would soon end its aggressive monetary tightening campaign.
Surveys from the Institute for Supply Management and S&P Global, which showed a decline in manufacturing output in March, reassured investors concerned about inflation.
According to CME Group’s Fedwatch tool, interest rate futures indicate a 56% chance that the Fed will increase rates by 25 basis points and a 44% chance that it will remain steady. This might be the last rate hike before a pause.
First-quarter earnings season is quickly approaching, and major banks will be among the first to report in the coming weeks. These reports will provide information about the sector’s general health after the March collapse of banks sparked concerns about a wider industry crisis.
The FTSE 100 in Britain, which is heavily weighted toward commodities, rallied as oil heavyweights jumped following the surprise decision by OPEC+. European shares were muted on Monday after finishing a volatile quarter higher.
The pan-European STOXX 600 index was unchanged on the first trading day of Q1 as oil prices stoked concerns about persistent inflation.
Despite a global banking crisis, European shares finished the first quarter higher, but concerns about higher interest rates pushing the world economy into a recession remain.
The final manufacturing Purchasing Managers’ Index for the Eurozone decreased from 48.5 in February to 47.3 in March, indicating that activity at regional factories decreased in March.
