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What’s happening: Crude oil jumped around 2%, hitting a five-week high on Monday amid supply concerns.
What happened: US President Donald Trump said he would impose secondary tariffs of 25% to 50% on countries buying oil from Russia in case of obstructions to ending the ongoing war with Ukraine.
Manufacturing activity expanded in the world’s second-biggest economy, China, lending further support to oil prices.
Why it matters: Last week Trump had announced plans to impose tariffs of 25% on vehicles and vehicle parts imported into the US on April 3. Now he is looking to impose secondary tariffs on Russian oil buyers, saying he is “very angry” with President Vladimir Putin.
China and India are among the top buyers of Russia crude and will be significantly impacted in case Trump introduces tariffs. Meanwhile, Russia has said it is working with the US on ideas to bring peace in Ukraine.
On Sunday, Trump also threatened Iran with tariffs in case it did not reach a deal over its nuclear program with the US. However, there are speculations of Trump not following through with his threats, which limited gains for oil prices.
Signs of rising demand provided support to oil prices after data released on Monday showed China’s official NBS manufacturing PMI surging to 50.5 in March, from 50.2 in the previous month. China’s manufacturing activity expanded for the second consecutive month and also rose to a one-year high, signalling that the government’s stimulus efforts are triggering an economic rebound.
Europe’s biggest economy, Germany, also saw inflation easing more than expected last month, which fuelled speculations of further interest rate cuts by the European Central Bank. Lower rates dampen borrowing costs, which can drive economic growth and increase oil demand.
Brent crude oil gained $1.11, or 1.5%, to close at $74.74 per barrel on Monday, notching the strongest settlement since February 24. WTI crude oil jumped $2.12, or 3.1%, to finish at $71.48 a barrel, hitting the highest close since February 20.
What to watch: Investors will continue monitoring tariff-related announcements from the Trump administration.
Data on crude oil stockpiles from the Energy Information Administration, due to be released on Wednesday, will also remain in focus. Crude oil inventories in the US declined by 3.341 million barrels in the week ended March 21, while crude stockpiles at the Cushing, Oklahoma delivery hub dipped by 0.755 million barrels.
Context: UK’s FTSE 100 fell to a one-month low on Monday but ended the first quarter of the year with gains.
Details: Investors shorted riskier assets on expectations of US President Donald Trump announcing extensive tariff plans on April 2.
However, UK is looking to reach an agreement with the US to avoid these tariffs, after Prime Minister Keir Starmer had “productive” talks with Trump on Sunday.
On the economic data front, net consumer credit borrowing by individuals in the UK fell to £1.36 billion in February, from £1.70 billion in the previous month. Net mortgage approvals for house purchases fell by 600 to 65,500 in February, while mortgage lending dipped by £0.9 billion to £3.3 billion.
Shares of industrial metal miners tumbled around 3.7% on Monday, with prices of copper dipping to their lowest level in over two weeks. Travel and leisure related stocks also fell sharply, with shares of IAG and Wizz Air tumbling 7.5% and 4%, respectively.
London’s FTSE 100 fell 0.88% to close at 8,582.81, while the domestically focused FTSE 250 tumbled 1.96% to settle at 19,475.48 on Monday.
The blue-chip FTSE 100 shed 2.6% in March after gaining 1.6% in the previous month. However, the index added more than 5% in the quarter, recording its strongest quarter since the fourth quarter of 2022. The FTSE 250 declined 4.1% last month.
What to watch: Investors await the release of economic data on UK’s S&P Global manufacturing PMI (1230 UAE Time) today. Analysts expect the S&P Global UK manufacturing PMI to decline to 44.6 in March, from 46.9 in the previous month.
Other Markets: US trading indices closed mostly higher on Monday, with the Dow Jones index and S&P 500 up by 1.00% and 0.55%, respectively, and the Nasdaq 100 down by 0.02%.
European foreign ministers accused Russia of delaying a ceasefire in Ukraine. The news sent the RUB/USD pair slightly lower in forex trading this morning.
Singapore’s private home prices rose by 0.6% in the first quarter, easing from 2.3% in the previous period, exerting pressure on the SGD/USD forex pair.
Thailand’s S&P Global manufacturing PMI declined to 49.9 in March, from 50.6 in February. Manufacturing activity slipping into the contraction zone sent the THB/USD pair lower in forex trading this morning.
Japan’s Au Jibun Bank manufacturing PMI rose to 48.4 in March, from a preliminary reading of 48.3, lending support to the JPY/USD forex pair.
South Korea’s trade surplus widened to $4.99 billion in March, from $4.29 billion in the year-ago period, sending the KRW/USD pair higher in forex trading this morning.
Eurozone’s HCOB manufacturing PMI (1200 UAE Time), inflation rate (1300 UAE Time) and unemployment rate (1300 UAE Time), Italy’s unemployment rate (1200 UAE Time), China’s current account (1230 UAE Time), South Africa’s ABSA manufacturing PMI (1300 UAE Time), Mexico’s business confidence (1600 UAE Time) and S&P Global manufacturing PMI (1900 UAE Time), US Redbook index (1655 UAE Time), S&P Global manufacturing PMI (1745 UAE Time), ISM manufacturing PMI (1800 UAE Time), JOLTs job openings (1800 UAE Time), construction spending (1800 UAE Time), JOLTs job quits (1800 UAE Time), RCM/TIPP economic optimism index (1810 UAE Time), Dallas Fed services index (1830 UAE Time) and Dallas Fed services revenues index (1830 UAE Time), Brazil’s S&P Global manufacturing PMI (1700 UAE Time), as well as Canada’s S&P Global manufacturing PMI (1730 UAE Time).
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