Oil starts the week cheaper on the strength of a ceasefire nobody else has signed. President Trump announced on Sunday that Russia and Ukraine had agreed to stop hitting each other’s energy infrastructure, Kyiv said it was hearing about it for the first time, and Moscow said nothing at all. Meanwhile the Gulf had one of its worst weekends since the Iran war began. Add a US bond market closed for Columbus Day, Japan on holiday and South Korea finally catching up with last week’s AI scare, and Monday looks less like a fresh start than a waiting room before bank earnings on Tuesday and US inflation data on Wednesday.
The 60-Second Market View
Wall Street ended last week on a firmer note. The S&P 500 rose 0.59 per cent on Friday to 7,811.54, the Nasdaq Composite added 0.64 per cent to 27,366.17 and the Dow gained 0.83 per cent to 51,654.95, giving all three a weekly gain. Tech recovered once reports clarified that OpenAI still expects annualised revenue of around $70 billion by the year end. US stock futures are up roughly 0.3 to 0.4 per cent this morning.
Oil is lower. West Texas Intermediate is near $90.38 a barrel, down about 1.6 per cent, and Brent is around $103.25, down about 1.4 per cent. Gold futures are near $4,228, up 0.3 per cent. In Asia, South Korea’s KOSPI has dropped about 3 per cent, while Hong Kong and mainland China are roughly flat and Australia is up 0.8 per cent. Tokyo is shut. Cash Treasuries will not trade in the US today, so Friday’s 10-year yield of about 5.24 per cent is the last word until Tuesday.
What Happened Over the Weekend
Three energy stories pulled in different directions. On Friday Mr Trump said he had agreed a deal with Vladimir Putin for Russia to supply diesel to the US and world markets, starting with 300,000 tonnes straight away, and the US Treasury issued a licence easing sanctions on Russian diesel until April 2027. On Sunday he went further and declared an immediate “energy ceasefire” between Russia and Ukraine, without giving any terms. Ukraine’s President Zelenskyy said Kyiv would support it if Russia did the same and that it was waiting for details from Washington.
The Gulf went the other way. A Houthi missile struck the main airport in Riyadh on Saturday, killing at least 12 people and wounding about 300, the deadliest single attack on a Gulf Arab state since the war began in February. The airport was hit again on Sunday, and the group also claimed attacks on Dammam airport and two Saudi Aramco facilities. Mr Trump said the US was considering joining Saudi strikes on the Houthis. In the Strait of Hormuz, Iran’s Revolutionary Guards said several tankers using what they called unauthorised routes had hit mines and caught fire, and warned that ships switching off their tracking signals would be treated as hostile.
Europe closed Friday strongly. London’s FTSE 100 gained 1.06 per cent to 10,552.05 as gilt yields eased, Germany’s DAX rose about 1.1 per cent to 25,087.27 and the wider Stoxx 600 climbed about 1 per cent.
The Big Story: Cheaper Oil, Same Risks
The market has chosen to believe the good news first. Brent opened higher in Asia on the Gulf violence, then turned lower as traders digested the idea of Russian refineries no longer being targeted and Russian diesel flowing back onto the world market. That is a reasonable first reaction. Diesel has been the sharpest pain point in this energy shock, with US pump prices for diesel still near record highs, and anything that adds refined product rather than crude goes straight at the problem.
The trouble is how much of it is real. The diesel volumes are small against a global market, and energy analysts have been quick to say they will not change prices much on their own. The ceasefire could matter more, because it would protect refining capacity on both sides, but it has no published terms, one party has not confirmed it and damaged refineries take months to repair. Set against that, the Houthis are now hitting Saudi airports and oil sites and threatening the Red Sea route that serves as the main alternative to Hormuz. A barrel that has to avoid both the Gulf and the Red Sea is an expensive barrel.
For markets, the implication is that this morning’s dip in oil is a headline discount, not a change in the supply picture. If it holds, it helps the inflation story at exactly the right moment, ahead of Wednesday’s US consumer price figures, which economists expect to show energy pushing the annual rate up to around 3.6 to 3.7 per cent. If it fades, the Federal Reserve hike that markets are pricing for December, which Reuters puts at roughly an 85 per cent chance, only gets firmer. What to watch: any confirmation, or denial, from Moscow; the Oman meeting on Hormuz that an Iranian official has already said will not produce a signed deal; and whether the US follows through on striking the Houthis.
FX
Currency markets are quiet with Tokyo shut and US bond traders at home. The dollar index is around 102.2, holding close to its highest level in about 18 months. The euro is near $1.1208 and sterling around $1.3244, with a euro buying roughly 84.6 pence. USD/JPY is near 158.2, still in the area where the risk of Japanese intervention tends to slow the yen’s slide. A softer oil price is mildly helpful for the euro and the pound, both of which suffer when energy import bills climb.
Equities
South Korea is the standout, and for a simple reason: its market was closed on Friday for Hangul Day, so this is its first full session to react to last Thursday’s OpenAI revenue scare. It has not enjoyed the catch-up. The KOSPI is down about 3 per cent near 6,426, below 6,500, with foreign investors selling and the big memory chipmakers Samsung Electronics and SK Hynix under pressure. Wall Street had already shrugged off much of that scare by Friday, but software led the rebound while chipmakers lagged, and Korea’s market leans heavily on chips. Taiwan is only slightly lower ahead of TSMC’s results on Thursday.
Last Friday’s US session also carried two useful warnings for this week. Delta Air Lines cut its profit forecast on fuel costs, a reminder that dear energy shows up in company earnings, and wireless carriers fell sharply after SpaceX agreed a spectrum deal that could make it a mobile competitor. Earnings season proper starts on Tuesday with the big US banks, and analysts expect third-quarter S&P 500 profits to have grown by around 30 per cent, much of it from energy and technology.
Bonds
The US bond market is closed today. SIFMA, the industry body that sets trading hours, has recommended a full close for US dollar government and corporate bond trading for Columbus Day, in the US, the UK and Japan. US stock markets are open as normal. That leaves the 10-year Treasury yield at Friday’s 5.24 per cent, the 30-year near 5.60 per cent and the 2-year near 4.79 per cent, after long-dated yields touched 24-year highs last week. Treasury futures will trade, but thin volumes mean any big move today deserves less trust than usual.
In Britain the 10-year gilt yield is around 5.41 per cent and the 30-year near 5.92 per cent, both a touch below last week’s highs. Over the weekend a think tank warned that the Chancellor cannot risk a “steady as you go” Budget later this month, which keeps fiscal credibility at the centre of the gilt story. Two Bank of England policymakers, Sarah Breeden and Catherine Mann, speak today. Germany’s 10-year yield is near 3.47 per cent and France’s near 4.85 per cent.
Commodities
West Texas Intermediate is around $90.38, down about 1.6 per cent, and Brent is near $103.25, down about 1.4 per cent, the two benchmarks easing together this morning. Brent is below the recent top near $110 but still well above $100, so this is cheaper, not cheap. Gold is near $4,228, edging higher as investors keep some protection on with the Gulf flaring up. Silver and copper are modestly firmer and natural gas is about 1.8 per cent lower.
Today’s Economic Calendar
10:30 — Bank of England Deputy Governor Sarah Breeden speaks — Markets are pricing a chance of a UK rate rise by the year end, so any hint on how the Bank weighs energy-driven inflation against weak growth can move gilts and sterling.
13:50 — Bank of England policymaker Catherine Mann speaks — Mann has been one of the more outspoken voices on the committee; a firm tone on inflation would tend to support the pound and lift shorter-dated gilt yields.
14:30 — US stock market opens, bond market closed for Columbus Day — Equities trade without a live Treasury market behind them, which can make moves in rate-sensitive shares less reliable than usual.
17:10 — Cleveland Fed President Beth Hammack speaks — With a December hike largely priced, traders will listen for whether a move could come sooner.
Canada is also closed for Thanksgiving and Japan for Health and Sports Day. The IMF and World Bank annual meetings get under way in Bangkok this week, with energy shocks and government debt high on the agenda.
Levels Traders Are Watching
These are reference points, not predictions. For Brent, $103 is where the market sits this morning, $100 is the obvious round number below and the recent top near $110 is the marker above. For West Texas Intermediate, $90 is the line in the sand. The S&P 500 closed Friday at 7,811.54, with the record high near 7,845 from earlier last week just above. The KOSPI has broken below 6,500, and Thursday’s close of 6,626 is the level it needs to regain to show the scare has passed. On bonds, the US 10-year at 5.24 per cent and the UK 30-year gilt near 6 per cent remain the long-end markers. In currencies, EUR/USD has the recent low near $1.1161 below, GBP/USD sits near $1.3244 and USD/JPY 158. Gold has $4,200 underneath. The FTSE 100 has Friday’s 10,552 close and 10,500 below.
Where This Leaves Us
The balance of evidence leans cautious, with a slightly better tone than a week ago. Wall Street proved on Friday that one bad revenue headline will not break the AI trade, and oil is easing at a useful moment for the inflation outlook. But the reasons for that easing are thin. A ceasefire with no terms and a modest diesel deal are being weighed against missiles on Saudi airports and mines in the Strait of Hormuz, and the second set of facts is harder to undo than the first.
What would change the view? Confirmation from Moscow and a visible pause in refinery strikes, Brent holding below $100 and a softer core reading in Wednesday’s US inflation data would argue the worst of the energy squeeze is passing and give long-dated bond yields room to fall. A further escalation with the Houthis, oil back above $105 or bank results that point to stretched borrowers would point the other way. The markets worth watching this week are Brent, the US 10-year yield once it reopens on Tuesday, the KOSPI and Korean chipmakers, sterling into the Bank of England speeches and the S&P 500 against its record high.
The opportunity is that a quiet, holiday-thinned Monday gives traders time to prepare a plan before a heavy run of earnings and inflation data. The risk is treating a headline as a fact and getting caught when the details disappoint. For beginners, the lesson from this weekend is simple: an announcement is not an agreement, and markets often price the first before checking the second. If you want to see how well your own approach handles weeks like this, take the free Trader Assessment and find out where you stand before the busy days arrive.
