Brent and WTI remain at extremely high levels, fueling global inflation

By the end of the day, the Dow Jones Index (US30) fell by 0.16% (weekly result -0.39%). The S&P 500 Index (US500) rose by 0.80% (weekly result +0.67%). The Tech Index NASDAQ (US100) closed higher on Friday by 1.95% (weekly result +2.41%). This week, the Federal Reserve is expected to keep the federal funds rate in the 3.50-3.75% range while the regulator analyzes new inflation risks caused by the surge in oil prices. This meeting will be symbolic, as it will likely be Jerome Powell’s last as Fed Chair before his term ends on May 15. Analysts expect cautious rhetoric and a signal that the rate‑cutting cycle will be paused until the new Chair officially takes office.

The US economic calendar will also include key data, most notably the preliminary estimate of Q1 GDP. Growth is expected to accelerate sharply to 2.1% compared to the modest 0.5% at the end of last year, though experts warn this may be temporary due to one‑off increases in government spending. Investors will also closely watch the PCE Index – the Fed’s preferred inflation gauge. Core prices in March are expected to rise by 0.3%, slightly below February’s reading, while personal spending is projected to increase by 0.9%.

In Canada, the Bank of Canada is expected to keep its rate at 2.25% this week, closely monitoring the impact of the Strait of Hormuz conflict on the national economy.

On Friday, Germany’s DAX (DE40) fell by 0.11% (weekly -1.05%), France’s CAC 40 (FR40) closed down 0.84% (weekly -1.88%), Spain’s IBEX 35 (ES35) dropped by 1.09% (weekly -3.11%), and the UK’s FTSE 100 (UK100) ended the session down 0.75% (weekly -2.71%). Europe faces a busy week with major central‑bank decisions and key GDP and inflation releases. The focus will be on the ECB meeting, where analysts expect rates to remain unchanged. However, the hawkish tone from Christine Lagarde and Isabel Schnabel suggests the pause may be temporary. The main source of concern will be the Eurozone inflation report. April inflation is expected to reach 2.9% – the highest in two and a half years. The primary driver is energy prices, which may show double‑digit growth due to the blockade of the Strait of Hormuz and the conflict in Iran. Against this backdrop, Q1 2026 GDP data is expected to confirm a very fragile recovery. The projected 0.2% growth for the Eurozone looks weak. In the UK, analysts expect the BoE to keep rates at 3.75%, though internal disagreement within the Monetary Policy Committee is possible.

Iran has expressed readiness to extend the temporary ceasefire and resume shipping in the Strait of Hormuz. In exchange, Tehran demands the lifting of the US naval blockade of its ports, offering to move nuclear‑program discussions into a separate negotiation track. This led to a decline in WTI prices to 95 dollars per barrel after a brief spike to 96.7 dollars. Despite Monday’s local pullback, Brent and WTI remain at extremely high levels, fueling global inflation and forcing central banks to reconsider their strategies in favor of further tightening.

The US natural‑gas prices (XNG) continued to fall, dropping by 3.6% to 2.52 dollars per MMBtu, hitting new lows not seen since October 2024. The main pressure factor remains the unusually mild spring, which has nearly eliminated heating demand while cooling demand has not yet begun. As a result, storage injections have accelerated significantly: as of April 24, inventories exceeded the seasonal norm by 8%, one percentage point higher than the previous week. The market shows a persistent bearish trend despite producers’ attempts to stabilize the situation. Over the past 18 days, US gas production has fallen by 4.1 billion cubic feet per day, reaching an 11‑year low of 108.1 billion cubic feet.

In Asia, Japan’s Nikkei 225 (JP225) rose by 1.52% for the week, China’s FTSE China A50 (CHA50) gained 0.50%, Hong Kong’s Hang Seng (HK50) closed the week down 0.86%, and Australia’s ASX 200 (AU200) slipped by 0.08%.

The Asia‑Pacific region enters a week of high volatility, with inflationary pressure and industrial‑sector resilience as key themes. In China, investors await PMI data, which is expected to show slowing factory‑activity growth. Meanwhile, from April 27 to 30, the Standing Committee of the National People’s Congress will meet to set legislative priorities amid global instability. These political signals, combined with corporate earnings reports, will shape the dynamics of the yuan and mainland Chinese stock markets.

Australia is preparing for troubling inflation news. Analysts prognose a sharp jump in annual inflation to 4.7% (from 3.7% the previous month), significantly increasing pressure on the RBA. Producer‑price data and commodity‑cost dynamics will reveal how deeply the energy shock has penetrated the country’s economic structure and whether another round of monetary tightening should be expected.