Oil set for record monthly gain, shares headed for loss

Brent crude futures pared gains and were last ​up 0.24% at $113.05 a barrel, on track for a 56% rise this month, the largest on record

Oil prices were set for a record monthly rise on Tuesday while Asian shares were headed for their sharpest decline in six years, capping ​a tumultuous month as the war in the Middle East stoked fears of higher inflation and slower growth.

Bonds were headed for their largest decline in months, owing ‌to the hawkish sea change in the global outlook for interest rates, while the dollar was on the cusp of its strongest gain in eight months.

A month into the war, investors continue to be whipsawed by a barrage of headlines as tensions and attacks between the U.S., Israel and Iran escalate.

It appears markets have gone from just mechanically trading headlines into a little bit more of a fear mode, taking risk off the ​table, said Vishnu Varathan, Mizuho’s head of macro research for Asia ex-Japan.

That partly might have to do with the transition from earlier thinking that there’s a good chance of ​Trump being able to control the timeline and/or your TACO trade, to now beginning to be concerned or fearing a more prolonged conflict, he said.

EUROSTOXX 50 futures rose 0.35%, while DAX futures added 0.48%.

Brent crude futures pared gains and were last ​up 0.24% at $113.05 a barrel, on track for a 56% rise this month, the largest on record.

I think inflation will be the bigger near-term concern for global markets, said Thomas Mathews, head of markets for Asia-Pacific at Capital Economics.

But if oil prices don’t fall back over the ​next few months, we will probably have to start thinking about growth too, he said.

The higher-for-longer energy prices have meant more pain for Asia, which is highly reliant on energy from the Middle ​East.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 1.43%, on track for a monthly decline of more than 13%, the most substantial decline since March 2020. Japan’s Nikkei was down 1.27% and set to ‌lose nearly ⁠13% this month, while South Korea’s Kospi was headed for a monthly decline of more than 18%, the most since 2008.