Brent Crude Prices Surge Amid Fed Rate Cut Signals and Mideast Tensions

The price of Brent, the global crude benchmark, rose 3.0 percent to trade at more than $81 per barrel.

Stock markets were mixed, taking a breather after rising on Friday when US Federal Reserve chief Jerome Powell signaled that a rate cut was coming.

In a further sign of the Fed’s thinking, another policymaker came out in support of a rate cut on Monday.

In an interview, San Francisco Fed President Mary Daly said it was “hard to imagine” not cutting interest rates in September, adding: “The direction of change is down, and the time to adjust is now.”

Mideast tensions elevated

Tensions were still running high in the Middle East following Sunday’s exchange of fire between Lebanon’s Hezbollah and Israel.

Hezbollah said it had launched a large-scale drone and rocket attack on Israel. Israel said it conducted air strikes into Lebanon that destroyed “thousands” of rocket launchers and thwarted a major attack.

The oil market was also reacting to Libya’s eastern-based administration declaring that it was shutting down oil fields under its control and “suspending all production and exports until further notice.”

The move by the Benghazi-based administration, which controls most of the country’s oil fields, comes amid rising tensions after the UN-recognised government based in Tripoli replaced the central bank governor on Monday morning.

Stocks markets wobble

In equities, the Dow rose but the S&P 500 and the tech-heavy Nasdaq fell amid a tech slump ahead of Nvidia’s earnings later this week.

The Paris CAC 40 closed in the green while Frankfurt fell.

Tokyo and Seoul finished in negative territory in Asia, but Hong Kong and other regional exchanges rose.

Equities surged on Friday after Powell declared at a summit of central bankers in Wyoming that “the time has come” for the Fed to reduce rates raised to a 23-year high to tame inflation.

The Fed is now expected to cut its key rate at the next policy meeting on September 17-18, and the only doubts are how big the cut will be and how many more will follow.

“I think people used today as an opportunity to take some near-term profits,” Sam Stovall, from CFRA.

New US second-quarter economic growth figures will be published on Thursday, followed by the Fed’s preferred gauge of inflation — the personal consumption expenditures (PCE) price index — on Friday and jobs data next week.

Weak jobs data rocked the markets in early August, as analysts worried that the Fed had waited too long to cut rates and avoid a recession.

Deutsche Bank analysts said they expect the Fed to cut rates by 0.25 percentage points next month but that “weak labor-market data could shift the focus” to a half-point reduction.

Key figures

Brent North Sea Crude: UP 3.0 percent at $81.43 per barrel

West Texas Intermediate: UP 3.5 percent at $77.42 per barrel

New York – Dow: UP 0.2 percent at 41,240.52 points (close)

New York – S&P 500: DOWN 0.3 percent at 5,616.84 (close)

New York – Nasdaq Composite: DOWN 0.9 percent at 17,725.76 (close)

Paris – CAC 40: UP 0.2 percent at 7,590.37 (close)

Frankfurt – DAX: DOWN 0.1 percent at 18,617.02 (close)

London – FTSE 100: Closed for a holiday

Tokyo – Nikkei 225: DOWN 0.7 percent at 38,110.22 (close)

Hong Kong – Hang Seng Index: UP 1.1 percent at 17,798.73 (close)

Shanghai – Composite: FLAT at 2,855.52 (close)

Dollar/yen: UP at 144.53 yen from 144.34 yen on Friday

Euro/dollar: DOWN at $1.1166 from $1.1193

Pound/dollar: DOWN at $1.3184 from $1.3209

Euro/pound: DOWN at 84.64 pence from 84.70 pence