Oil prices increased in early Asian trading on Thursday, continuing significant gains from the previous session after the assassination of a Hamas leader in Iran heightened the risk of a broader Middle East conflict and amid signs of strong oil demand in the U.S.

 

Global benchmark Brent crude futures increased by 67 cents, or 0.8%, to $81.51 per barrel by 0007 GMT, while U.S. West Texas Intermediate crude futures increased by 69 cents, or 0.9%, to $78.60 per barrel.

 

The most active contracts on both benchmarks surged about 4% in the previous session.

 

Hamas leader Ismail Haniyeh was assassinated in the Iranian capital Tehran on Wednesday, less than 24 hours after Hezbollah's most senior military commander, based in Lebanon, was killed in an Israeli strike in Beirut.

 

The assassinations heightened concerns that the 10-month-old conflict in Gaza between Israel and Hamas could escalate into a wider Middle East war, potentially disrupting oil supplies from the region.

 

"We fear the region is on the brink of an all-out war," Japan's deputy United Nations representative Shino Mitsuko said on Wednesday as the U.N. Security Council called for increased diplomatic efforts.

 

Also contributing to the rise in oil prices was a series of data releases from the U.S., the world's largest oil consumer, and a weaker dollar.

 

Strong export demand reduced U.S. crude oil stockpiles by 3.4 million barrels in the week ending July 26 to 433 million barrels, according to data from the U.S. Energy Information Administration on Wednesday.

 

U.S. oil inventories have declined for five consecutive weeks, the longest decline since January 2021.

 

U.S. oil demand reached a seasonal record in May as gasoline consumption soared to its highest level since pre-pandemic levels, separate EIA data released on Wednesday showed.

 

Meanwhile, the U.S. dollar index extended its losses on Thursday from the previous session after the Federal Reserve held interest rates steady but indicated the possibility of a rate cut in September. A weaker dollar can increase oil demand from investors holding other currencies.

Given the significant political turmoil we've witnessed recently, it is reasonable for traders to question how the markets and economy will perform in 2025 as a new administration takes power next January.

 

If only a comprehensive guide existed to navigate such uncertainty. The stark differences in party platforms seem firmly established.

 

Such a guide might be called, "What to Expect When You're Electing," providing a wealth of insights for next year's economy.

 

The guide would compare policy platforms and outline the respective economic implications of each. It would also examine likely market behaviors in the initial year of a new presidential tenure as well as tax and regulatory frameworks. This resource would depict the risk/reward scenarios for the macro economy and individual sectors.

 

Of course, things do not always proceed as planned.

Undoubtedly, external factors such as the composition of the new Congress and unforeseen events outside the control of U.S. domestic leadership also play significant roles.

If such a guide were available, it might look something like this.

 

The GOP, under presidential candidate Donald Trump, might aim to extend the 2017 Tax Cuts and Jobs Act. They could potentially reduce corporate taxes further to 15% from the current 21% and impose tariffs on imports.

Additionally, a second Trump term might seek to roll back various Biden-era regulations, including incentives for clean energy.

 

In theory, one could argue that tax reductions and deregulation benefit business. They would be a positive development for Wall Street and, by extension, financial markets.

However, more unfunded tax cuts would exacerbate the nation's deficits and debt. The U.S. debt to gross domestic product ratio was 123% as of the 2023 fiscal year.

 

Across-the-board tariffs are fundamentally inflationary, according to economists. They could also trigger a global trade war and subsequent recession.

Former President Donald Trump is also pledging the largest mass deportation of immigrants since the Eisenhower era, at a time when the U.S. has more job openings than available workers, according to the latest Bureau of Labor Statistics data.

 

A significant reduction in the labor force is both inflationary and recessionary. This scenario could result in stagflation.

Observers await tax policy details from Vice President Kamala Harris, whom President Joe Biden endorsed to run in his stead. The administration has suggested rolling back the Trump tax cuts, returning the highest marginal income tax rate to 39.6%, its level before the 2017 Tax Cuts and Jobs Act. They also propose raising the corporate tax rate to 28%.

 

Wall Street is unlikely to favor such changes.

Expectations include a continuation of strict regulatory practices, which corporate America has found restrictive during the Biden administration.

Furthermore, Biden's proposal includes raising the top marginal rate on long-term capital gains and qualified dividends to 44.6% from the current 20%, in addition to a 3.8% net investment income tax for high earners. He also aims for billionaires to pay at least 25% of their income in taxes.

 

One could argue that increasing taxes as the economy softens may lead to a recession, even if the Federal Reserve's interest rate policies were becoming more lenient.

Historically, the first year of a presidential cycle is the toughest for the stock market, prompting our guide to recommend locking in profits sooner rather than later. This strategy is advisable regardless of the election outcome and acts as a hedge against unexpected events and policy shifts.

 

The past two years have brought significant gains for stock market investors, despite uncertainties following the pandemic-related lockdowns.

However, now is the time to prepare for the near future by setting aside some emergency funds in case the next administration's policies result in higher expenses than anticipated.

 

Indeed, 2025 might come to be known as "the year of living anxiously," a theme that could be explored further in a sequel to our guide, "What to Expect in the First Year."

— CNBC Contributor Ron Insana is the CEO of iFi.AI, an artificial intelligence fintech company.

Asia-Pacific markets had mixed results on Thursday following comments from U.S. Federal Reserve Chair Jerome Powell, suggesting a possible rate cut in September if inflation data remains "encouraging."

 

However, Japan's Nikkei 225 dropped 2.49% to close at 38,126.33, and the broader Topix plummeted 3.24% to 2,703.69. The losses were primarily driven by declines in real estate stocks and major exporters as the yen strengthened.

 

A strong yen reduces the competitiveness of Japanese exports, and increased borrowing costs typically affect real estate companies negatively.

 

On Wednesday, the Bank of Japan raised its benchmark interest rate to "around 0.25%," its highest level since 2008. The yen fell below the 150 level against the dollar late Wednesday, appreciating by 0.9% and currently trading at 148.61.

 

The Japanese finance ministry disclosed that it spent 5.53 trillion yen ($36.8 billion) on foreign exchange intervention.

 

Toyota reported a 12.2% increase in revenue to 11.84 trillion yen ($79.05 billion) for its first quarter and a 16.7% rise in operating income, which reached 1.31 trillion yen. Net income grew 2.8% year over year to 1.33 trillion yen. Despite these figures, Toyota's shares fell by 8.29%.

 

The Fed's Federal Open Market Committee meeting concluded on Wednesday with the decision to keep the federal funds rate at its current range of 5.25% to 5.5%.

 

Powell cautioned that a rate cut is not definite, although he also tentatively ruled out a 50-basis-point reduction.

 

"I don't want to be overly specific about our next steps, but a 50-basis-point cut is not something we're considering right now," he stated.

 

Investors in Asia are also evaluating business activity data from around the region, including July's purchasing managers index data from China, Japan, and South Korea, in addition to the Fed's comments.

 

Australia's S&P/ASX 200 set new all-time highs, increasing by 0.28% to finish at 8,114.7.

 

South Korea's Kospi rose 0.25% to end at 2,777.68, while the small-cap Kosdaq gained 1.29% to 813.53. Reuters reported that the country's exports grew at the fastest pace in six months in July, based on preliminary data.

 

South Korean exports increased by 13.9% year-over-year to $57.49 billion, following a 5.1% rise the previous month. However, this figure was below the 18.4% increase anticipated by economists surveyed by Reuters.

 

Hong Kong's Hang Seng index was down 0.13% in its final hour of trading, while the mainland China's CSI 300 dropped 0.66% to close at 3,419.27.

 

Hong Kong's GDP grew by 3.3% year-over-year in the second quarter, exceeding economists' expectations of a 2.7% rise as polled by Reuters.

 

China's factory activity contracted in July, according to a survey by Caixin and S&P Global. The manufacturing PMI was 49.8, below the expansionary threshold and against the anticipated figure of 51.5 from economists polled by Reuters.

 

A PMI above 50 indicates sector expansion, while a figure below 50 indicates contraction.

 

Overnight in the U.S., stocks surged after the Federal Reserve decided to keep interest rates unchanged, as expected. Traders also reinvested in large-cap tech stocks.

 

The S&P 500 climbed 1.58% to close at 5,522.30, and the Nasdaq Composite jumped 2.64% to 17,599.40, marking their best session since February.

 

The Dow Jones Industrial Average added 99.46 points, or 0.24%.

 

 

Gold prices climbed on Tuesday after Federal Reserve Chairman Jerome Powell's comments increased the likelihood of a September rate cut, while investors waited for additional US economic data to provide further insights on monetary policy.

 

Spot gold increased by 0.7% to $2,440.01 per ounce, nearing its May 20 record of $2,449.89.

 

Powell stated on Monday that the three US inflation readings in the second quarter of this year "somewhat increase confidence" that the rate of price increases is aligning with the Fed's target sustainably. Investors awaited US retail sales data, due at 12:30 GMT on Tuesday, for additional guidance.

 

Gold reached new heights in April and May but pulled back in June when projected US interest rate cuts were reduced, and physical demand began to decline due to high prices. Greater optimism for a September rate cut in July pushed non-yielding bullion higher again.

 

"Uncertainty surrounding the protracted wait for US interest rate cuts could lead to a soft third quarter for gold before a rally gathers momentum to achieve a new high," stated Nitesh Shah, commodity strategist at WisdomTree.

 

According to WisdomTree's models, gold was overvalued by 7% at the end of June, indicating that most of this overvaluation will likely correct in the current quarter.

 

Central bank purchases, a critical demand category, have slowed in recent months, primarily due to the lack of buying by China's central bank.

 

However, with the impending likelihood of rate cuts, exchange-traded funds (ETFs) backed by physical gold, another vital demand segment, have resumed their acquisitions after several years of declines.

 

Gold ETFs, which store bullion for investors, reported inflows of $0.5 billion, or 7.6 metric tons, last week, according to the World Gold Council.

In a volatile day for the cryptocurrency market, Bitcoin experienced a brief spike above $59,000 during the early U.S. trading hours on Wednesday before retreating slightly to settle around $57,400 by the afternoon. The world’s largest cryptocurrency by market capitalization has remained range-bound, facing selling pressure from Germany and steady inflows into U.S. spot Bitcoin exchange-traded funds (ETFs).

 

German Bitcoin Sales and ETF Inflows

 

Germany’s decision to divest its seized Bitcoin holdings has been a significant factor in recent market movements. The German government, which initially seized nearly 50,000 Bitcoin from the online piracy site Movie2k, has reduced its holdings to 13,110 BTC, valued at less than $1 billion for the first time. The sales have been executed through cryptocurrency exchanges, adding selling pressure to the market.

 

Despite this, U.S. spot Bitcoin ETFs have seen robust inflows, with $511.2 million flowing into these funds on Monday and Tuesday alone, according to data from Farside Investors. This suggests that while some entities are offloading Bitcoin, others are seizing the opportunity to accumulate, reflecting a mixed sentiment in the market.

 

Congressional Vote on Crypto Custody

 

Wednesday could also be a pivotal day for U.S. crypto regulation, as the House of Representatives votes on an attempt to overrule President Biden's veto of a bill aimed at overturning the SEC’s special regulations for custodians of crypto assets. The SEC’s policy has been viewed as a significant hurdle for traditional financial institutions looking to offer crypto custodial services.

 

If overturned, the bill would make it easier for traditional banks to serve as custodians of digital assets. However, Caitlin Long, CEO of Custodia Bank, expressed doubts on social media about whether Congress has the votes necessary to overturn the veto, indicating that the policy may remain in place.

 

Interestingly, on the same day, a meeting was scheduled between crypto industry representatives, major Democratic leaders, and White House officials. Organized by Democratic Rep. Ro Khanna of California, this meeting highlights the growing political interest in crypto, though Democrats have been slower to engage with crypto supporters compared to Republicans. Recently, the Republican party has made various pro-crypto stances, such as support for Bitcoin mining and self-custody, part of their official platform.

 

CFTC Chairman Calls for Legislative Action

 

On the regulatory front, Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam testified before a Senate committee on Wednesday, expressing his concerns about the lack of legislative progress on digital asset regulation. In his opening remarks, Behnam emphasized the need for a completed legislative response to protect consumers from the risks associated with digital assets.

Behnam’s testimony comes at a time when crypto regulation is a hot topic in Washington, with both parties grappling with how to approach the rapidly evolving digital asset landscape.

 

Federal Reserve Watch

 

In addition to the developments in the crypto world, market participants also kept a close eye on Federal Reserve Chairman Jerome Powell’s second day of testimony before Congress. Observers are looking for clues about the future direction of interest rate policy, which could have broader implications for financial markets, including cryptocurrencies.

Wednesday’s developments underscore the dynamic and often unpredictable nature of the cryptocurrency market. While Bitcoin’s brief spike above $59,000 shows that investor interest remains strong, the ongoing regulatory uncertainty and external pressures, such as Germany’s Bitcoin sales, continue to create a complex trading environment. As the week progresses, market participants will be closely watching both the U.S. political landscape and international developments for further cues on where the crypto market might be headed next.

Chip stocks were rallying across the board on Wednesday, driven by a big earnings beat from AMD and Morgan Stanley naming Nvidia a top stock pick.

 

AMD spiked as much as 11% before paring gains to about 5% higher. Nvidia surged 12% at intraday highs. Other stocks getting a lift included ASML (up 11%), Qualcomm (up 6%), and Samsung (up 4%).

 

AMD beat on both the top and the bottom lines, while showing strong growth in its data-center business, fueled by sales of graphics processing units, which power AI technology.

 

In addition to riding AMD's wave higher, Nvidia was renamed Morgan Stanley's top semiconductor stock pick. The firm said a recent sell-off in the stock "presents a good entry point as we continue to hear strong data points short term and long term, with overblown competitive concerns."

 

The analysts said the stock had slid on concerns that would likely fade with time, like tighter customer capital-spending budgets, a tough competitive landscape, export controls, and supply-chain concerns.

 

"Through those concerns, the earnings environment is likely to remain strong, for NVIDIA and for the whole AI complex," the analysts said.

 

The semiconductor industry is also likely getting a boost from a Reuters report that said new US restrictions on chip exports from foreign companies to China may not apply to US allies such as the Netherlands, Japan, and South Korea.

European stocks started the new trading week with gains as regional investors embraced the results of the first round of extraordinary parliamentary elections in France.

 

Europe's Stoxx 600 index was up 0.34 percent by 4 p.m. London time, recovering from four consecutive losses. This was helped by a sharp rise in France's CAC 40 index, which first jumped more than 2.5% before slipping to 1.23%.

 

European markets are reacting to the results of the first round of extraordinary parliamentary elections in France, which showed a sharp rise in votes for the anti-immigrant National Rally party.

 

Early results show it will fight for an outright majority in the second round of voting to be held on July 7, but analysts say it will be the "least bad" result from a market perspective. French President Emmanuel Macron's centrist alliance came in third place on Sunday.

 

On the data front, German inflation fell in five key states in June and the EU's national consumer price index fell to 2.5 percent from 2.8 percent in May. Economists polled by Reuters had expected a reading of 2.6%.

 

This came ahead of the release of euro zone inflation data on Tuesday.

 

Markets in the Asia-Pacific region had a mixed start to the second half of the year as investors assessed June business activity data in China as well as business confidence data in Japan.

 

Meanwhile, U.S. stock futures rose in overnight trading on Sunday as Wall Street looks ahead to the second half of 2024 after a strong finish to the first half of the trading year.

Algorithmic Trading: Revolutionizing the Financial Markets

Introduction to Algorithmic Trading

Algorithmic trading, often abbreviated as algo trading, refers to the use of computer algorithms to execute trading strategies at speeds and frequencies that are impossible for human traders. These algorithms are designed to make trading decisions based on pre-defined criteria, which can range from simple conditions to complex mathematical models.

 

The Evolution of Trading

Traditional trading was primarily manual, relying heavily on the instincts and judgments of human traders. However, with the advent of technology and electronic trading platforms, the mode of trading has drastically evolved. The introduction of algorithms in trading has brought about efficiency, speed, and the ability to leverage complex strategies that can't be manually implemented. For instance, high-frequency trading (HFT) can execute thousands of trades per second, something beyond the realm of human capability.

 

How Algorithmic Trading Works

At its core, algorithmic trading involves the use of predefined sets of rules (algorithms) to place trades. These rules can include timing, price, quantity, or even sophisticated mathematical models that can be derived from historical data. The process generally involves the following steps:

1. Strategy Formulation: Traders or quants design a trading strategy based on rigorous research and analysis. This usually involves backtesting the strategy using historical data to ensure its robustness.

2. Coding the Algorithm: The trading strategy is then converted into an algorithm using programming languages such as Python, C++, or MATLAB.

3. Live Testing: The algorithm is tested in a live market environment, often with simulated trades to gauge its performance.

4. Deployment: Once the algorithm passes through rigorous testing, it is deployed in a live trading scenario, automatically executing trades based on the predefined criteria.

 

Types of Algorithmic Trading Strategies

Algorithmic trading encompasses a broad range of strategies, each designed to achieve different objectives. Some of the most common types include:

1. Market Making: This strategy involves placing buy and sell orders at different prices to capture the spread. The algorithm continuously updates these orders based on market conditions.

2. Statistical Arbitrage: This strategy involves identifying price inefficiencies between related financial instruments and taking opposite positions to profit from the convergence of their prices.

3. Momentum Trading: Here, the algorithm identifies stocks that are moving in a particular direction with high momentum and places trades to capitalize on these trends.

4. Mean Reversion: This strategy assumes that asset prices will revert to their historical mean or average over time. The algorithm identifies deviations from this mean and places trades to exploit the expected reversion.

 

Advantages of Algorithmic Trading

Algorithmic trading has revolutionized the financial markets by offering several key advantages:

1. Speed: Algorithms can execute trades in milliseconds, far faster than a human trader could.

2. Accuracy: Automated trading reduces the risk of human error, ensuring that trades are executed precisely as per the algorithm's criteria.

3. Quantitative Analysis: Algorithms can process vast amounts of data in real-time, enabling traders to leverage complex quantitative models for better decision-making.

4. Reduced Costs: Automated trading minimizes transaction costs by optimizing trade execution and reducing the need for human intervention.

5. Consistency: Algorithms can ensure consistent execution of trading strategies, eliminating the emotional biases that can affect human traders.

 

Risks and Challenges

Despite its numerous advantages, algorithmic trading also comes with its share of risks and challenges:

1. Technical Failures: System glitches, software bugs, or hardware failures can lead to significant financial losses.

2. Overfitting: Algorithms that perform well in backtesting may not necessarily perform well in real market conditions. This can lead to overconfidence and eventual losses.

3. Market Impact: High-frequency trading can exacerbate market volatility and contribute to flash crashes.

4. Regulatory Challenges: The regulatory environment for algorithmic trading is constantly evolving, requiring traders to stay updated with the latest compliance requirements.

 

Future of Algorithmic Trading

The future of algorithmic trading looks promising, with advancements in artificial intelligence, machine learning, and big data analytics shaping the landscape. These technologies have the potential to make algorithms even more sophisticated and adaptive, enabling traders to navigate increasingly complex market environments with greater precision.

Moreover, the democratization of trading technology has opened the doors for individual traders and small firms to participate in algorithmic trading, leveling the playing field previously dominated by large financial institutions.

As we move forward, the integration of quantum computing and blockchain technology may further revolutionize the financial markets, offering unprecedented levels of speed, security, and transparency.

 

Conclusion

Algorithmic trading has undoubtedly revolutionized the financial markets, bringing in a new era of speed, efficiency, and complexity. While it offers significant advantages, it also comes with its set of challenges that traders must navigate carefully. As technology continues to evolve, the landscape of algorithmic trading will likely undergo further transformations, promising exciting opportunities and challenges alike. Whether you're an institutional player or an individual trader, understanding the intricacies of algorithmic trading is crucial for staying ahead in today's dynamic financial markets.

 

European markets rallied on Tuesday, with the FTSE 100 index hitting an intraday record high as investors built on the previous session's positive momentum.

 

The pan-European benchmark Stoxx 600 index rose 0.6% in early trading, with most sectors trading in positive territory. Technology stocks led the gains, rising 1.8%, while mining stocks fell 1.3%.

 

Britain's FTSE 100 index continued to rise, rising 0.55% to reach an all-time high of 8067.73 by 8:10 a.m. London time. This came after the index posted its fourth straight daily gain on Monday and surpassed the previous record close set on February 20, 2023.

 

U.K. stocks rose while sterling fell against the U.S. dollar as investors raised bets on a summer interest rate cut by the Bank of England.

 

Investors in the region are looking ahead to bank earnings this week and will also keep an eye on a number of technology news in the US, with Tesla reporting during US trading hours on Tuesday.

 

In Europe, Renault, Kering, OVH, Novartis and Associated British Foods all posted profits on Tuesday. On the data front, preliminary manufacturing and services purchasing managers' index data for the eurozone for April will be released.

 

In the evening, Asia-Pacific markets extended gains from Monday as investors await the release of flash data on business activity in Australia, Japan and India. U.S. stock futures were little changed Monday evening.

 

European stocks opened higher Tuesday, with the benchmark Stoxx 600 index up 0.6 percent by 8:05 a.m. London time.

 

Britain's FTSE 100 index was up 0.5 percent at an intraday high, France's CAC 40 was up 0.3 percent and Germany's DAX was up 0.8 percent.

 

- Karen Gilchrist

 

Swiss drugmaker Novartis raised its full-year outlook after reporting better-than-expected first-quarter results thanks to the success of drugs such as heart failure drug Entresto and psoriasis drug Cosentyx.

 

The company said it expects net sales to grow by one to several double-digit percent in 2024 and adjusted operating income to grow by several double-digit to mid-tenths of a percent.

 

Previously, the company projected that adjusted operating income would increase by a "high single-digit" percentage and sales growth would increase by a "mid-single-digit" percentage.

 

- Karen Gilchrist

 

French automaker Renault on Tuesday reported a 1.8 percent rise in first-quarter earnings, helped by strong performance in its finance business.

 

The company sold 549,099 vehicles in the three-month period and posted revenue of 11.7 billion euros ($12.47 billion). That was slightly higher than the company's forecast for annual revenue to fall to 11.49 billion euros.

 

- Karen Gilchrist

 

According to an analysis of recent data, six stocks in the S&P 500 tend to rise when Tesla shares fall.

 

The stock price performance of these six companies has been inversely correlated with Tesla's stock performance in the past month. They have tended to rise this year, in contrast to Tesla stock's 40% drop.

Tesla shares fell just over 3% on Monday, extending its year-to-date drop to 34% after the company laid off more than 10% of its workforce, or more than 14,000 employees.

 

Tesla CEO Elon Musk sent out a memo to employees on Sunday announcing that the EV maker would be cutting jobs due to "overlapping roles and job functions in some areas."

 

Two top executives left Tesla in connection with the layoffs, including Senior Vice President Drew Baglino, who led the company's engineering efforts in batteries, motors and energy products. Baglino worked at Tesla for 18 years and was often on the same stage as Musk during product announcements and co-hosted the company's earnings calls.

 

The other departing executive was Rohan Patel, who served as Tesla's vice president of public policy and business development.

 

Usually when a company announces job cuts, its stock price jumps as investors welcome the cost-saving measures and expect higher profits in the future.

 

However, the drop in Tesla's stock after the job cuts is causing wariness on Wall Street as investors are increasingly concerned about weakening demand for electric cars.

 

Earlier this month, Tesla reported first-quarter deliveries that far exceeded Wall Street forecasts and marked the company's first quarterly year-over-year sales decline since 2020.

 

"Inventory accumulated in Q1 and it appears that the primary reason for the decline in deliveries was lower demand for electric vehicles across regions, particularly in North America, where EV sales have been essentially flat since the summer of 2023," Bank of America said in a note last week.

 

For his part, Musk said in the memo that the job cuts "will allow us to be lean, innovative and ready for the next cycle of growth."

 

This is Tesla's first major job cut since it laid off employees at its Buffalo, N.Y., plant in February 2023.

Oil prices rose in early Asian trading after hopes diminished that talks between Israel and Hamas would lead to a ceasefire in Gaza and ease tensions in the Middle East.

 

Brent crude futures rose 40 cents to $90.78 a barrel by 0032 GMT. U.S. West Texas Intermediate (WTI) crude rose 35 cents to $86.78.

 

A new round of ceasefire talks between Israel and Hamas in Cairo ended a multi-season rally on Monday, sending Brent crude down for the first time in five sessions and WTI crude down for the first time in seven, amid the prospect of weakening geopolitical risks.

 

But then Israeli Prime Minister Benjamin Netanyahu said Monday that an unspecified date had been set for an Israeli invasion of the Rafah enclave in Gaza, "ending the short-term hopes that gripped the market yesterday that geopolitical tensions in the region might be easing," Tony Sycamore, a market analyst at IG, wrote in a note.

 

Hamas rejected Israel's latest cease-fire offer made at talks in Cairo, a senior Hamas official said Monday.

 

The market continues to weigh the risk of oil supply disruptions. Iran's response to Israel's alleged attack on its consulate in Syria "could drag the oil market into a conflict that has barely touched it since the Hamas attack on Israel," ANZ analysts said in a client note.

 

Tehran said last week it would retaliate after an airstrike that killed two of its generals and five military advisers in Damascus, although Israel did not claim responsibility for the attack.

 

Meanwhile, broader fundamentals are supporting prices. Fuel demand in India hit a record high in the 2024 financial year thanks to a rise in gasoline and jet fuel consumption, data showed on Monday. Improved manufacturing activity in China, announced last week, is expected to boost fuel demand.

 

The market will be watching inflation data due from the U.S. and China this week for further signals on the direction of the economies of the world's two biggest oil consumers.

 

In the Americas, Mexico's state-owned oil company Pemex said it would cut crude exports by 330,000 barrels a day to be able to supply more oil to domestic refineries, reducing by a third the amount of supply available to the company's customers in the U.S., Europe and Asia.

The dollar remained broadly steady on Monday as data showing a decline in U.S. prices bolstered bets that the Federal Reserve may cut interest rates in June, while the yen held near 152 per dollar, keeping traders on guard for the threat of intervention.

 

The price index for personal consumption expenditures, or PCE, rose 0.3 percent in February, the Commerce Department's Bureau of Economic Analysis reported Friday, compared with the 0.4 percent increase that economists had forecast.

 

The report also showed that consumer spending last month rose the most in a year, underscoring the economy's resilience. Most markets around the world were closed Friday.

 

Federal Reserve Chairman Jerome Powell on Friday said the latest U.S. inflation data was "consistent with what we would like to see," in comments that echoed his remarks after the Fed's policy meeting last month.

 

Markets now rate the probability of a Fed rate cut in June at 68.5% versus 57% at the end of last week, as CME's FedWatch tool shows. Traders also estimate the probability of a rate cut this year at 75 basis points.

 

Citi strategists say the Fed remains on track to start cutting rates in June. "If activity persists, the Fed could make three rate cuts this year. But further softening in labor markets leads us to expect five rate cuts this year."

 

The euro rose 0.06 percent to $1.07945, near the more than one-month low of $1.0769 hit last week. Sterling was at $1.2637, up 0.12% for the day.

 

The dollar index, which measures the U.S. currency against six peers, fell 0.038% to 104.42, but remained near the six-week high of 104.73 it reached last week.

 

The currency market has been centered on the yen as its move toward levels last seen in 1990 revives the threat of intervention by Japanese authorities.

 

The yen hit a 34-year low against the dollar at 151.975 on Wednesday and was last at 151.315 per dollar on Monday, a slightly stronger level.

 

Japan intervened in the currency market at 2022, first in September and then in October, when the yen fell to a 32-year low of 152 per dollar.

 

Japan's plans for the yen remain difficult to predict. Its fiscal year is over, which means the Bank of Japan doesn't have to worry about a sudden yen move affecting balance sheets.

 

But news of last week's emergency meeting of the three monetary authorities - the Ministry of Finance, or MOF, the Bank of Japan and the Financial Services Agency - and the officials' entreaties seemed to help bring the yen back from 34-year lows.

 

Finance Minister Shunichi Suzuki said Monday that he was not ruling out options against excessive currency movement and would react accordingly, reiterating his warning against a fast-moving yen.

 

Citi analysts still expect the Japanese authorities to intervene somewhere in the 152-155 per dollar zone, noting that the yen has weakened against the Chinese yuan as well.

 

"We do not expect the IFS to intervene in the Chinese yuan, but further appreciation of this currency pair could be a contributing factor to currency intervention by Japan," they said in a client note on Friday.

 

In other currencies, the Australian dollar rose 0.21% to $0.654 and the New Zealand dollar gained 0.20% to $0.599.

 

In cryptocurrencies, bitcoin was last up 1.83% to $70,927.00. Ether was last up 3.46% to $3,619.20.