Oil Prices Surge as China’s Stimulus Efforts Lift Asian Stocks; U.S. Markets Struggle

Oil prices climbed sharply on Monday, while U.S. stock futures declined and Asian markets rallied, reflecting the differing economic outlooks between the United States and other global regions.

This week is set to be eventful with multiple central bank meetings, including the U.S. Federal Reserve, which is expected to keep interest rates unchanged when its meeting concludes on Wednesday.

Oil Prices Climb Amid Geopolitical Tensions and China Demand Optimism

Oil prices surged following comments from the U.S. Defense Secretary over the weekend, stating that the country would continue targeting Yemen’s Houthis until they halted attacks on shipping routes. The heightened geopolitical tensions raised concerns over potential supply disruptions, pushing oil prices higher in early Asian trading.

Brent crude futures rose 1.06% to $71.33 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 1.12% to $67.94 per barrel. Analysts noted that if WTI surpassed $68.50, it could trigger further short covering in the market.

Adding to the bullish sentiment, expectations of a rebound in Chinese demand also supported oil prices. Beijing recently introduced new policies aimed at increasing domestic consumption, including raising household incomes and launching a childcare subsidy program.

China’s financial regulator further bolstered confidence by pledging to ease consumer credit restrictions and improve loan terms, providing long-term financial support to stimulate spending. ING’s Chief Economist for Greater China, Lynn Song, emphasized that these measures focus on both increasing household capacity and willingness to spend, which could drive consumption growth to mid-single digits in 2025. However, further improvements would depend on a sustained recovery in domestic demand.

Investors now await further details from a press conference later on Monday, where top Chinese officials are expected to outline additional measures to boost consumer spending.

Chinese Markets Respond to Stimulus, Yuan Strengthens

The Chinese yuan gained 0.2% in onshore markets to 7.2265 per dollar, while its offshore counterpart rose 0.17% to 7.2268.

Economic data released on Monday showed that China’s industrial production exceeded expectations, growing 5.9% in the first two months of the year. However, property investment remained a drag on the economy.

Despite the upbeat data, market reactions were muted. The CSI 300 blue-chip index reversed early gains to trade 0.07% lower, while the Shanghai Composite Index remained up 0.28%. Meanwhile, Hong Kong’s Hang Seng Index jumped over 0.8%, helping extend gains in MSCI’s broadest index of Asia-Pacific shares, which climbed 1% to a one-week high. Japan’s Nikkei 225 also rose 1.24%.

U.S. Markets Face Uncertainty Amid Recession Concerns

While Asian stocks opened the week on a strong note, U.S. futures signaled a weaker start for Wall Street.

Nasdaq futures dropped 0.44%, and S&P 500 futures fell 0.4%, reflecting growing concerns about a potential U.S. recession. Treasury Secretary Scott Bessent cautioned in a Sunday interview that there were “no guarantees” the country could avoid an economic downturn, amplifying investor anxiety.

Former U.S. President Donald Trump had also refrained from making predictions about a recession, raising concerns about the impact of his trade policies on the economy. Analysts suggested that U.S. leaders might be willing to endure short-term economic struggles for potential long-term gains.

European Markets and Currency Movements

European stock futures edged higher, with EUROSTOXX 50 futures up 0.2% and FTSE futures rising 0.36%. European markets have recently found support from Germany’s fiscal reset, which aims to strengthen defense spending and boost economic growth. Over the weekend, Germany’s parliamentary budget committee approved a €500 billion ($540 billion) infrastructure and borrowing reform package.

The euro hovered near a five-month high at $1.0882, while the U.S. dollar remained weak against a basket of global currencies, declining more than 4% so far this year. Market uncertainty over Trump’s economic policies has contributed to the dollar’s struggles.

The Japanese yen held firm at 148.59 per dollar ahead of the Bank of Japan’s upcoming policy meeting. While the BOJ is expected to keep rates steady, most economists anticipate further monetary tightening later this year.

Gold Prices Near Record Highs

Gold remained close to record levels, trading at $2,991 per ounce after surpassing the $3,000 mark for the first time on Friday. The precious metal continued its historic rally as investors sought safe-haven assets amid global economic uncertainties.