Oil Surges after Russian Airstrike, Production Stoppages

Oil prices jumped on Monday as traders reacted to heightened geopolitical tensions in Ukraine as well as reduced output in Norway and Kazakhstan. Gold was supported by a retreat in the US dollar from last week’s highs. Treasury yields dipped in Tokyo trading, reflecting renewed expectations of Federal Reserve easing. European stocks are set to open higher, with minimal data in focus except for eurozone inflation readings and housing figures in the US.

Equities

The FTSE 100 gained 0.57% on Monday, closing near a one-week high as precious metal miners rose 3.2% on stronger gold prices. Aerospace and industrial group Melrose Industries surged 7.6% after reporting robust revenue growth over the past four months and projecting significant free cash flow for 2025. Meanwhile, the FTSE 250 fell 0.4%, reflecting caution ahead of UK inflation data expected later in the week. Construction and real estate stocks were among the biggest decliners, falling over 1.4% each, while property portal Rightmove reported a sharper-than-usual drop in asking prices for homes in the last month.

In the US, the S&P 500 rose 0.39%, and the Nasdaq gained 0.60%, buoyed by anticipation of Nvidia's earnings on Wednesday. Nvidia slipped 1.3%, with concerns over reports of its AI chips overheating in servers tempering enthusiasm for its earnings, which are expected to demonstrate robust demand. Tesla jumped 5.6% after reports suggested the incoming Trump administration could relax rules for self-driving cars, which investors viewed as a positive for the automaker.

CVS Health shares climbed 5.4% after the company announced the addition of four new board members as part of an agreement with Glenview Capital Management, signalling a potential shift in strategy. The Dow Jones Industrial Average edged down 0.13%, reflecting mixed sentiment ahead of key earnings reports from major retailers, including Walmart and Target, which are expected to provide insight into consumer strength during the critical holiday shopping season.

Both the S&P 500 and Nasdaq remain under pressure after last week’s losses, driven by rising uncertainty over Federal Reserve policy and Trump’s upcoming cabinet appointments.

Forex & Commodities

The Japanese yen strengthened modestly to 154.47 against the US dollar, benefiting from profit-taking on the greenback after its recent rally to a one-year high. The dollar index slipped further, resting at 106.29 after easing 0.4% in the previous session, while the British pound stabilised at $1.2670. The euro regained some ground to $1.0584, bouncing from last week’s one-year low. In Australia, the Reserve Bank’s commitment to a steady rate policy supported the Australian dollar, holding at $0.6504.

Gold prices edged higher, reaching a one-week peak of $2,618.11 per ounce. A softer dollar boosted demand for bullion, as traders evaluated the odds of a 25-basis-point rate cut at the Federal Reserve’s December meeting, currently standing at 59%. Silver also climbed, touching $31.22 per ounce, while platinum remained steady at $967.70. Palladium held firm at $1,003.90 after a 5% surge on Monday.

Oil prices were largely unchanged Tuesday morning following Monday’s significant gains. Brent crude was steady at $73.28 a barrel, while WTI traded at $69.11 for January delivery. The pause in production at Norway’s Johan Sverdrup oilfield and reduced output at Kazakhstan’s Tengiz field supported prices, amid rising geopolitical tensions after a large Russian airstrike on Ukraine. Investors are closely monitoring developments as the US permits Ukraine to use long-range missiles, increasing caution in oil markets.