Global Stocks Surge on Hopes for Iran Deal, Oil Prices Fall
Global stock markets surged on Monday as hopes for a deal to end the Iran conflict buoyed risk appetite, but oil prices and the US dollar fell.
The Strait of Hormuz remains shut, with Washington and Tehran locked in negotiations. However, U.S. President Donald Trump said he had instructed his representatives not to rush into any deal.
Oil prices, which have driven energy costs sharply higher since the conflict began nearly three months ago, fell to two-week lows on Monday. Brent crude futures dropped over 4% to $98.83 a barrel, while U.S. West Texas Intermediate was at $92.03 a barrel, also down over 4%. The euro rose 0.33% to $1.1646.
Nick Twidale, chief market analyst at ATFX Global, said markets will need confirmation that the Strait of Hormuz will reopen before a sustained surge can occur. Liquidity is expected to be thin as major markets in the U.S., UK, Hong Kong, and South Korea are closed on Monday.
Rate expectations have reset following the prolonged energy disruptions from the conflict. Markets now fully price in a 25-basis-point hike from the U.S. Federal Reserve in January 2027, a sharp shift from earlier predictions of two rate cuts this year. Mark Dowding, CIO for Fixed Income at RBC BlueBay Asset Management, warned that inflation remains on an upward trajectory and will continue to build pressure for a rate hike.