Global Stocks Soar as Middle East Tensions Ease and Oil Prices Plummet

Global stock markets rose on Monday as tensions in the Middle East eased and oil prices dropped. The pause in hostilities between Iran and the US led to a significant decline in Brent crude, which fell 6.3% to $90.70 per barrel.

The lull in fighting over the Strait of Hormuz also reduced concerns about inflation, which had been driving up oil prices earlier in the week. Economically sensitive stocks, such as retail and travel shares, rallied more than 2%, while the broader market was weighed down by a drop in oil-related stocks.

The STOXX 600 index in Europe rose nearly 0.5% to its highest level since July 7. S&P 500 futures jumped 0.9%, with Nasdaq futures rising 1.5%. The MSCI's broadest index of Asia-Pacific shares outside Japan also gained 0.3%.

The US central bank's decision on interest rates is due on Wednesday, and markets imply a one-in-three chance of a rate hike. However, analysts doubt that Chair Kevin Warsh would support such a move. Lee Hardman, senior currency analyst at MUFG, said that 'a rate hike this week would send (a) powerful signal... however, we are not convinced that he wants to back up his tough talk on inflation with policy action as soon as this week.'

Meanwhile, the euro edged up 0.23% to $1.1395.