Global markets mixed as Middle East risks counter US-Russia energy deal

Global equity markets opened on mixed footing Monday as traders balanced a breakthrough US-Russia energy deal against persistent geopolitical risks in the Middle East, with oil prices retreating from recent highs and investors awaiting key inflation data for signals on Federal Reserve policy.

US-Russia deal eases energy supply concerns

US President Donald Trump and Russian President Vladimir Putin agreed on Friday that Moscow would supply millions of metric tons of diesel to the United States and global markets, the Treasury Department said, authorizing transactions involving Russian diesel through April 7, 2027. Russia subsequently announced it had partially lifted its ban on diesel fuel exports under the agreement. Trump stated that a ceasefire between Russia and Ukraine had been reached for October 11, particularly regarding attacks on energy infrastructure.

The developments pushed December-delivery Brent crude down 1.2% to $103.4 a barrel, though medium- and long-term supply risks persist given the unresolved geopolitical backdrop. The US bond market remained closed Monday for the Columbus Day holiday, halting trading in Treasuries.

Middle East attacks keep risk premium elevated

Iranian-backed Yemeni Houthi militias targeted Riyadh and Dammam airports in Saudi Arabia over the weekend alongside two energy facilities in the country’s east, threatening to disrupt regional supply chains. The strikes underscored ongoing vulnerabilities in Strait of Hormuz shipping lanes despite the temporary easing of tensions elsewhere.

Analysts noted that medium- and long-term risks to oil prices are expected to continue given the unresolved conflicts in the region, keeping investors cautious even as immediate supply concerns from the Russia-Ukraine theater recede.

Fed policy and growth forecasts in focus

The Federal Reserve’s latest survey showed median household income and net worth rose between 2022 and 2025, even as stock market participation declined during the period. Investors are bracing for US inflation reports this week, with economists expecting acceleration driven by energy costs; a softer reading could encourage Fed officials to pivot dovish at the October meeting, stabilizing risk assets.

The International Monetary Fund and World Bank convened in Bangkok on Monday for meetings scheduled through October 18 to address global economic headwinds. The UN Conference on Trade and Development warned that global growth could slow to 2.6% in 2026, projecting a 4% expansion in trade and 2.7% GDP growth for 2027, while developing economies are expected to grow 4% — down from 4.7%.

Equities mixed across regions

Wall Street posted broad gains Monday, with the Dow Jones Industrial Average climbing 0.83%, the S&P 500 rising 0.59%, and the Nasdaq Composite adding 0.64%. SpaceX shares advanced 1.3% after the company secured spectrum rights for its Starlink Mobile service, pressuring rival carriers AT&T, T-Mobile, and Verizon, which fell 9.9%, 13.3%, and 8.8% respectively at the open. The University of Michigan’s consumer confidence index dropped 46.3% in October to its lowest level since May.

European equities maintained upward momentum Monday following a breakthrough EU-China agreement to halve hybrid vehicle exports, improve European market access, and streamline rare earth licensing, with Germany’s DAX 40 up 1.13%, France’s CAC 40 rising 0.95%, Italy’s FTSE MIB gaining 0.91%, and the UK’s FTSE 100 adding 1.06%. Standard & Poor’s affirmed the UK’s credit rating at “AA/A-1+” with a stable outlook. In Asia, South Korea’s Kospi declined 2.7% and China’s Shanghai Composite slipped 0.1%, while Hong Kong’s Hang Seng edged up 0.2% and Japanese markets remained closed for a holiday. Investors are awaiting earnings from Taiwan Semiconductor Manufacturing Company due Thursday.