European shares and the US dollar wobbled on Monday ahead of what is likely to be an eventful week for U.S. interest rate policy, while oil prices were subdued as risks to Russian supplies seemed to fade somewhat.
The pan-European STOXX 600 index was little changed in early trading after hitting its highest level since March on Friday, while the MSCI All Country World Index hovered close to the record high touched last week.
Earlier in the Asian session, a cautiously risk-on mood saw indices in Japan and Taiwan make record peaks, while a gauge of Chinese stocks reached its highest level in a decade.
Investors are bracing for US President Donald Trump's meeting with Ukrainian President Volodymyr Zelenskiy and European leaders later on Monday to discuss the next steps to end the war in Ukraine, after Trump's summit with Russian President Vladimir Putin in Alaska on Friday.
While the summit did not result in an agreement, Trump afterward appeared more aligned with Moscow on seeking a full peace deal with Ukraine instead of a ceasefire first.
The dollar index came under pressure this year as Trump’s tariff policies eroded its safe-haven appeal.
It rebounded sharply from a low of 95.99 on July 1 to a peak of 100 on August 1 on strong economic data and new trade deals, including with Japan. Since then, it has slipped to 97.78, down 2.25% from the high, driven by a 93% probability of a Fed rate cut in September (CME FedWatch), amid weaker payrolls and softer retail sales. Trump’s summit with Putin yielded no new sanctions on Russia, while his meeting with Zelenskiy today could affect dollar sentiment. Friday’s Jackson Hole Symposium is another key event, with Powell’s remarks likely to shape expectations.
The index is consolidating around 97.78 ahead of the Zelenskiy meeting.
|Its 30-day correlation with Treasury yields has risen steadily since April, after tariff uncertainty briefly broke the link, showing that rate expectations—not risk sentiment—are the main driver. The index has immediate support at 97.45 (mid-August lows), next support at 96.26, and resistance at 98.46.
Oil fell 1.2% on Monday and steadied after an early drop on Tuesday, as investors await Friday’s meeting between US and Russian leaders for fresh direction. Traders are closely watching the lead-up to the talks, which could result in eased US sanctions on OPEC+ member Russia and potentially bring more supply to the market.
Prices have declined this year as the producer group accelerated output increases despite the risk of oversupply, with US tariff actions adding pressure to global demand. On Tuesday, the US Department of Energy raised its forecast for this year’s global surplus to 1.7 million barrels per day.
The International Energy Agency will release its estimates on Wednesday, while OPEC maintained a more optimistic view, projecting a tighter global oil market than previously expected.
A US industry report indicated a slight increase in nationwide stockpiles last week, with official data due Wednesday.
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