Oil prices surge following Red Sea attacks
Oil prices shot up nearly three percent on Monday as more companies suspended shipping through the Red Sea following attacks on vessels by Yemen's Iran-backed Houthi rebels. Meanwhile US stocks sought to continue last week's rally on expectations that the US Federal Reserve will cut interest rates next year, although it appears to have lost steam in Asia and Europe. Yemen's Iran-backed Houthi rebels said on Monday they had attacked two "Israeli-linked" vessels in the Red Sea, the latest in a flurry of drone and missile strikes on vessels entering the Red Sea, aimed at pressuring Israel over its war with Hamas in the Gaza Strip. Five major shipping firms, including three of the world's largest, have said they are rerouting their vessels away from the Red Sea. On Monday, oil giant BP and Evergreen became the latest to suspend transit. Ships must travel through the Red Sea to use the Suez Canal, a key transit route for cargo and oil. Investors are also keeping tabs on the Bank of Japan's meeting this week, though speculation it will shift away from a policy of not hiking rates has faded. Equity indices are still set to end the year on a high after the Fed suggested last week it will begin loosening monetary policy as US data shows inflation coming down and the economy on course for a soft landing. The Dow and Nasdaq last week hit record highs on Wall Street as tech firms surged, but the buying frenzy slowed on Friday as investors took a step back, which analysts said was to be expected after the advances. The Paris CAC 40 and Frankfurt's DAX indices also hit all-time peaks last week. A number of Fed officials lined up last week to douse expectations they will slash rates next year. Some observers have predicted as many as six cuts, but the bank's "dot plot" forecast saw three. The Bank of Japan's own decision is due on Tuesday, and while there has been talk that it is about to shift away from years of ultra-loose policy, analysts do not expect it to do so for a few months. Officials have kept rates in negative territory and stuck to a policy of controlling bond prices in a bid to boost the economy, but with inflation rising and the yen struggling, they are now said to be shifting. (AFP)