Investing.com -- Saudi Arabia vows to slash oil production from next month, while U.S. President Joe Biden signs into a law a bill that lifts the country's debt ceiling and averts a possibly catastrophic default. Elsewhere, Apple gears up to reveal a long-awaited "mixed reality" headset.
1. Saudi output cut promise sends oil prices higher
Oil prices climbed sharply on Monday after Saudi Arabia, the world’s top exporter, pledged over the weekend additional production cuts from July, likely tightening the market further in the second half of the year.
The Saudis announced on Sunday its output would drop to 9 million barrels per day next month, a cut of around one million barrels a day from its production levels in May. The kingdom's energy minister also noted that the cut could be extended.
Meanwhile, the Organization of the Petroleum Exporting Countries and their allies, including Russia, agreed at a weekend meeting to bring down its overall production goals by 1.4 million barrels per day from January 2024.
The group, known as OPEC+, has been attempting to give additional support to oil prices, which have been slipping in recent months due to concerns over slowing global growth and sluggish demand.
By 05:03 ET (09:03 GMT), U.S. crude futures traded 2.26% higher at $73.36 a barrel, while the Brent contract added 2.15% to $77.77 per barrel.
2. Biden signs debt limit bill
With the U.S. only days away from a potentially damaging default, President Joe Biden officially signed into a law a bill raising the country's $31.4 trillion debt ceiling.
The pen stroke marks the denouement of a weeks-long drama in Washington that has had global markets nervously watching every twist and turn. The Treasury Department had warned that the federal government could run out of money to pay its bills by June 5 if lawmakers failed to lift the debt limit.
Fraught negotiations between Biden and Republican House Speaker Kevin McCarthy resulted in legislation that managed to work its way through both chambers of Congress despite outspoken opposition from both hardline conservatives and progressives. The measure suspends the borrowing limit until 2025 and caps some government spending.
3. Futures mixed after strong week on Wall Street
U.S. stock futures were mixed on Monday after the major indices posted solid gains to close out the prior week, thanks in part to the debt ceiling deal and a stronger-than-anticipated May jobs report.
By 05:04 ET, the Dow futures contract gained 38 points or 0.11%, while S&P 500 futures dipped by 1 point or 0.01% and Nasdaq 100 futures slipped by 36 points or 0.25%.
The S&P 500 jumped by 1.45% on Friday, pushing the benchmark index up to its best week since March. The broad-based Dow Jones Industrial Average also surged by 2.12% and the tech-heavy Nasdaq Composite gained 1.07%.
Along with the debt limit progress in Washington, data on Friday showed that the U.S. economy added 339,000 jobs last month, far more than estimates. Wage growth also eased.
The numbers signaled that the world's largest economy may not be heading toward a recession and indicated that the Federal Reserve could pause a long-running campaign of interest rate hikes at its June policy meeting. Both factors helped boost investor sentiment.
4. China's services sector activity accelerates in May
Growth in China’s services sector sped up in May, a private survey showed on Monday, as the relaxing of anti-COVID measures continued to push up consumer demand and employment in the services industry.
The Caixin services purchasing managers’ index (PMI) rose to 57.1 in May from 56.4 in April, beating expectations for a reading of 55.2. The index grew for a fifth straight month after China relaxed most anti-COVID restrictions at the beginning of 2023.
China's services sector fared much better than its manufacturing industry, which saw activity contract during the month. Manufacturing is by far the country's biggest economic driver, with weakness in the sector potentially heralding a slowdown in the economy's nascent post-pandemic recovery.
5. Apple to announce 'mixed reality' headset
Attention will turn later today to Apple's (NASDAQ:AAPL) developer conference at its California headquarters, where the tech behemoth is preparing to unveil a new "mixed reality" headset that has been seven years in the making.
The device aims to bring together augmented reality, which imprints digital images on to the real world, and virtual reality, which immerses users in a computer-generated simulation.
Apple typically announces new software updates at its annual event, but this time the company will reveal its newest piece of hardware since the launch of the Apple Watch in 2015. Speculation surrounds the impact of the release, with observers wondering if the headset will spark a resurgence in interest in AR/VR technology that has been supplanted recently by a frenzy around generative artificial intelligence.
Reports say the device won't be cheap: The cost is estimated to be as much as $3,000.