Global Markets Rally as Oil Tumbles Amid Middle East Tensions
Global equity markets ended Monday on a high note, shaking off concerns over growing tensions in the Middle East. Investors appeared unfazed by Iran's retaliatory strikes on US military facilities in Qatar, focusing instead on broader market momentum. Meanwhile, oil prices plummeted following recent highs not seen in months.
Iran's Strikes Seen as Controlled Move
Tehran's decision to launch airstrikes on American bases in Qatar sent ripples through geopolitical circles, but the market response was surprisingly calm. According to a senior regional source, Iran had informed the United States through diplomatic channels ahead of the attack — a move interpreted as a bid to de-escalate the situation rather than provoke further conflict.
Oil Slides Sharply After Reaching Recent Peaks
Oil benchmarks, which had recently surged to five-month highs, reversed direction sharply on Monday.
Brent crude dropped by 7.2% to close at 71.48 dollars per barrel, while WTI fell by the same margin to 68.51 dollars.
Index Performance Recap
Despite geopolitical uncertainty, Wall Street closed in the green:
- Dow Jones: +0.89% to 42,581.78;
- S&P 500: +0.96% to 6,025.17;
- Nasdaq Composite: +0.94% to 19,630.98.
In Europe:
Across Asian markets:
- MSCI Asia Pacific (excluding Japan): -0.70%.
The broader MSCI World Index gained 0.49%, reflecting a more optimistic global investment climate.
Fed's Bowman Hints at Rate Cuts as Labor Market Risks Rise
Federal Reserve Vice Chair for Supervision Michelle Bowman suggested on Monday that the US central bank may be approaching a point where lowering interest rates becomes appropriate. Her growing concern about labor market vulnerabilities appears to be overtaking previous fears about persistent inflation driven by high import tariffs.
Her comments prompted a swift reaction in financial markets, especially among currency traders.
Mixed Signals on Currency Markets
Following Bowman's remarks, the US dollar posted mixed results. It rose slightly against the Japanese yen by 0.08 percent to reach 146.15 but declined by 0.68 percent versus the Swiss franc, settling at 0.81260. The euro recovered from earlier losses and gained 0.49 percent to reach 1.157675 dollars.
The dollar index, which tracks the greenback against a basket of major currencies, slipped by 0.5 percent to 98.39.
Gold Prices Rebound After Early Losses
Precious metals saw upward momentum as well. Spot gold rose by 0.23 percent to 3375.71 dollars per ounce, while US gold futures advanced by 0.3 percent to 3395 dollars.
European Stocks Rally on Truce Announcement
Investor sentiment soared across European markets on Tuesday after former US President Donald Trump announced a ceasefire agreement between Iran and Israel. The news was greeted with relief by traders, boosting appetite for risk across global exchanges.
The STOXX 600, a broad gauge of European equities, rose by 1.4 percent to 542.6 points. Germany's DAX index led the gains with an increase of nearly 2 percent.
Israeli Prime Minister Benjamin Netanyahu confirmed that his government accepted the US-brokered ceasefire proposal.
Oil Drops to Two-Week Lows as Supply Fears Fade, Gold Retreats on Risk Appetite
Oil prices fell to their lowest levels in two weeks amid a noticeable decline in supply-related concerns. Meanwhile, investor appetite for riskier assets pushed gold prices down to nearly two-week lows, signaling a broader shift in market sentiment.
Market Split: Energy Slips While Travel Stocks Surge
Sectors responded differently to the shifting market dynamics. Energy shares declined by 3.5 percent, reflecting the weakness in oil prices. In contrast, travel and leisure stocks rallied, rising by 4.3 percent, supported by growing investor optimism about global economic resilience and consumer demand.
AstraZeneca Gains as Lung Cancer Drug Gets US Approval
Shares of UK-based pharmaceutical giant AstraZeneca rose by 1.3 percent after the company, alongside its Japanese partner Daiichi Sankyo, received approval from US regulators for their precision lung cancer treatment, Datroway. The approval is seen as a significant milestone in the company's oncology pipelines.
Spotlight on Powell's Congressional Testimony
Investor attention is now focused on upcoming remarks by Federal Reserve Chair Jerome Powell before the US Congress. His testimony is expected to provide crucial clues about the central bank's policy direction and could influence financial markets in the short term.
