Oil surge pressures stocks before inflation data

• Global stocks moved lower on Monday as higher oil prices, Middle East tensions, and European political uncertainty weighed on investor sentiment.
• Brent crude rose nearly 1.5% to $97.60 per barrel, while European stocks fell 0.3% and S&P 500 futures declined 0.1%.
• Investors are watching upcoming U.S. inflation data as markets assess the potential impact of higher energy prices on central bank interest rate decisions.

Global stocks moved lower on Monday as rising oil prices, Middle East conflict risks, and European political uncertainty affected investor sentiment ahead of key U.S. inflation data, while Brent crude climbed nearly 1.5% to $97.60 per barrel.

Markets reacted after Iran announced plans to establish a restricted zone outside the Strait of Hormuz following U.S. strikes on Iranian tankers and Iran’s reported missile launches targeting U.S. Navy ships.

"Central bank patience through the energy shock has been supportive of asset prices and the credit cycle," said Bruce Kasman, global head of economics at JPMorgan.

The increase in energy prices has raised concerns that higher fuel and food costs could influence central bank decisions, with diesel prices reported at record levels and around 90% above pre-conflict levels.

Investors are focused on U.S. consumer price data this week, while European stocks declined 0.3%, S&P 500 futures fell 0.1%, and Nasdaq futures increased 0.3% during lighter trading due to a U.S. holiday.

The European Central Bank is expected by markets to raise rates to 2.75% on Thursday, while futures indicate a 75% probability of another increase to 3.0% by December.

The euro traded near $1.1614 after weakening from August highs, while political developments in Germany and France added uncertainty around the currency outlook as investors monitored possible shifts in European policy.