Crude oil rises as investors look ahead to central bank meetings

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Crude oil moved higher on Monday, boosting energy stocks, but limiting gains in U.S. stock markets as investors looked ahead to a busy week of central bank meetings to set interest rates around the world.

Brent crude rose 0.7 percent to $94.61 a barrel on Monday, close to the highest level since November 2022. The U.S. equivalent, West Texas Intermediate, rose 1.2 percent to $91.96 a barrel as traders oil prices continued to rise following news earlier this month. that Saudi Arabia and Russia, two of the world’s largest producers, planned to expand their voluntary production and export restrictions.

The rising prices saw shares of ExxonMobil and ConocoPhillips rise, both up 1.2 percent. The heavyweight sector also pushed the S&P 500 up 0.3 percent in New York. The tech-focused Nasdaq Composite rose 0.3 percent.

However, European and Asian markets posted declines, with the region-wide Stoxx Europe 600 ending the day 1.1 percent lower and Hong Kong’s Hang Seng index down 1.4 percent.

The moves came as traders prepared for interest rate decisions this week from three of the world’s largest central banks. In the US, the Federal Reserve is expected to maintain its target range unchanged between 5.25 percent and 5.5 percent.

“Further rate hikes would risk pushing the economy into a hard landing,” said Thomas Simons, senior U.S. economist at Jefferies. “Instead, the Fed can opt for a strategy that maintains the current policy rate for a long time.”

The yield on interest-sensitive US government bonds with a maturity of two years rose by 0.02 percentage point to 5.06 percent, while the yield on ten-year government bonds remained flat at 4.33 percent. Bond yields rise when prices fall.

The Bank of England, which will also hold a rate meeting this week, is expected to raise bank interest rates by a quarter of a percentage point to 5.5 percent, while the Bank of Japan is expected to leave rates unchanged. at minus 0.1 percent.

Line chart of the stock price, rebased (%), showing that SocGen's shares collapsed after it announced lower profit targets

The Euro Stoxx 600 banking index fell 1.7 percent as investors took a dim view of the strategic plan announced by Société Générale’s new CEO Slawomir Krupa, which included cuts to profitability targets. The French bank’s shares fell 12.1 percent and were the biggest fallers on France’s Cac 40 index, which fell 1.5 percent.

Investors remained wary of a downturn in the chip sector after Taiwan’s TSMC – the world’s largest contract chipmaker – last week told its key suppliers to delay deliveries of high-end chipmaking equipment.

TSMC, which lost 3.2 percent on Monday, warns that the recent boom in artificial intelligence technology is struggling to offset broader economic headwinds and China’s stalled recovery.

British chip designer Arm lost 7.4 percent after completing the largest initial public offering on Wall Street in almost two years last week.

In Europe, Oslo-listed Nordic Semiconductor lost 9.9 percent after lowering its third-quarter revenue forecast. Shares of Dutch chipmaker ASML fell 0.8 percent and BE Semiconductor lost 4 percent. South Korea’s SK Hynix fell 2.8 percent.

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