Global stock markets experienced a relief rally on Monday, driven by a sharp decline in oil prices and an easing of geopolitical tensions in the Middle East. Brent crude dropped 6.3% to $90.70 a barrel, while U.S. crude fell 5.7% to $84.12, after Iran indicated a willingness to halt attacks if the United States reciprocated. This reduction in oil prices alleviated inflation concerns, leading to a bump in equities and bonds.
Asian markets broadly rose, with Japan's Nikkei 225 gaining 0.5% and South Korea's Kospi adding 1.32%. Chinese blue chips increased by 1.2%, partly due to chipmaker CXMT Corp's nearly 500% surge on its Shanghai debut after a $8.6 billion IPO. S&P 500 futures rose 0.9%, and Nasdaq futures jumped 1.5%. Europe's STOXX 600 also climbed almost 0.5%, touching its highest point since July 7. The drop in oil also saw 10-year Treasury yields fall 3.8 basis points to 4.64%, and non-interest-paying gold climbing 0.92% to $4,090.45 an ounce.
Investors are now keenly awaiting a series of central bank decisions this week from the G7 economies, including the U.S. Federal Reserve on Wednesday, followed by the Bank of England and the Bank of Japan. While interest rates are largely expected to remain unchanged, policymakers' assessments of inflation risks from higher energy prices will be scrutinized. Additionally, approximately one-third of S&P 500 companies are scheduled to report earnings this week, with an anticipated 26.5% increase over last year, according to LSEG IBES data. Key companies reporting include Microsoft, Meta Platforms, Amazon, Apple, and Qualcomm.
