Harry Robertson and Ankur Banerjee
LONDON/SINGAPORE (Reuters) – Global shares were little changed on Monday as oil prices retreated from a six-month peak, while U.S. bond yields hit their highest levels since late November as investors continued to curb bets that the Federal Reserve will cut interest rates. .
The European index rose 0.24% in early trade after falling 1.2% the previous week, gaining 0.54% after better-than-expected industrial data lifted sentiment.
The US was unchanged after the index fell 0.95% last week. Nasdaq futures were also unchanged.
Stock markets got off to a choppy start to the second quarter as the risk of wider conflict in the Middle East pushed oil prices higher. Strong U.S. economic data also heightened investor concerns about the extent to which central banks will be able to reduce borrowing costs.
However, oil prices fell on Monday as geopolitical tensions eased after Israel withdrew more troops from the southern Gaza Strip. Truce talks began on Sunday and continued on Monday, although a Hamas spokesman said no progress had been made, despite Egyptian sources saying progress had been made.
The price was last down 0.9% at $90.33 a barrel after hitting a six-month high of $91.91 last week as factors such as a suspected Israeli attack on the Iranian embassy in Syria added to upward pressure.
“However, the price remains strong overall and, coupled with supply tightening globally, there is no immediate catalyst for a price decline,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
A much stronger-than-expected US jobs report on Friday, which followed strong manufacturing data earlier in the week, led investors to cut bets on the Fed’s June rate cut.
Market prices on Monday showed traders see about 48% chance of a rate cut in June, down from about 59% a week ago.
The likelihood that rates will remain high for a long time sent the 10-year U.S. Treasury yield on Monday to its highest level since late November at 4.458%, up 8 basis points.
“The strength of the US labor market calls into question the June contraction,” said Mohit Kumar, chief European economist at Jefferies.
“While we shouldn’t put too much weight on one payroll report… if the data remains reliable, we’ll have to rethink our June proposal.”
Investors’ attention this week will be focused on Wednesday’s US Consumer Price Index (CPI) report, which is expected to show core inflation, which excludes volatile energy and food prices, slowing to 3.7% in March from 3. 8% in the previous month.
If inflation data shows a downward trend over the next two months, the Fed could still be open to cutting rates in June, said Vasu Menon, managing director of investment strategy at OCBC Bank in Singapore.
The European Central Bank sets interest rates on Thursday, with investors looking to officials for the green light for rate cuts to begin in June after inflation slowed more than expected to 2.4% in March.
The pair changed slightly and amounted to 104.37. But the Japanese yen remained under pressure, with the dollar up 0.2% and not far from its highest level since 1994 at 151.91 yen, leading traders to fear possible intervention from Japanese authorities.
Trading in mainland Chinese shares resumed after a long holiday on Thursday, with the blue-chip index down 0.88%. The Hong Kong index rose 0.07% and the 225 index rose 0.91%.
hit a new all-time high of $2,353.80 an ounce and was last up 0.4%.