Morning deal: Oil on the run – Reuters

A preview of the day ahead in the European and global markets of Anshuman Daga

Just when equity markets seemed to be recovering after a frantic third quarter – plagued by rising interest rates and meteoric dollar gains – there are more problems brewing.

This time, oil prices are to blame.

Brent crude futures hit a three-week high near $94 a barrel after OPEC+ agreed to deep cuts in oil production, the biggest cut since 2020, prompting a of its greatest confrontations with the West. Read more

President Joe Biden called the surprise decision “short-sighted” and called on his administration and Congress to explore ways to increase US energy production and reduce OPEC’s control over oil prices. ‘energy

Oil’s upward march could not have come at a worse time.

Markets are already pricing in a recession in major economies and a sharp rise in energy prices will add to already high inflation and interest rates.

European Commission President Ursula von der Leyen has imposed gas price caps on European leaders in a bid to contain soaring energy costs. Read more

As Asian stocks recovered on Thursday, the dollar held on to gains as bets on further Fed hikes firmed.

“No Fed pivot is possible in an environment of rising oil prices due to supply destruction in response to demand destruction as monetary policy is tightened,” said Michael Every, global strategist at Rabobank, in a note.

On Wednesday, San Francisco Federal Reserve Chair Mary Daly underscored the Fed’s commitment to curbing inflation by raising interest rates further. Read more

More gains are in store for the unstoppable dollar, according to a Reuters poll of currency strategists.

The dollar index

The British pound remained stable on Thursday after weakening a day earlier as British Prime Minister Liz Truss sought to restore her authority after a chaotic first month in office. Read more

Fitch cut its outlook for its credit rating for UK government debt from “negative” to “stable”, just days after a similar move by Standard & Poor’s following the government’s September 23 budget statement. Read more

Key developments that could influence markets on Thursday:

Economic data: Eurozone retail sales (August); Industrial orders in Germany, CPI in the Netherlands, initial jobless claims in the United States

Speakers: Fed’s Loretta Mester, Lisa Cook, Charles Evans and Christopher Waller all speak at various events

IMF’s Georgieva speaks ahead of IMF/World Bank meetings

Reporting by Anshuman Daga; Editing by Kim Coghill

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