Global stock markets advanced on Monday while oil prices fell by nearly 7pc after the US and Iran announced a pause to their fighting and signalled a possible return to negotiations over an interim ceasefire.
The market rally followed a pause in hostilities after nearly two weeks of escalating conflict, with investors responding positively to signs that diplomatic efforts may help prevent a wider regional war.
Although the Pentagon has not publicly commented on the decision to halt strikes on Iranian coastal targets and infrastructure,
US Ambassador to the UN Mike Waltz told CBS News that the pause was intended to “give diplomacy some space.”
Investor sentiment improved sharply as concerns over disruptions to global energy supplies eased.
Brent crude, the international oil benchmark, fell 6.8pc to USD 85.49 a barrel, while US West Texas Intermediate crude dropped 7pc to USD83.06 a barrel.
“Oil’s sharp retreat at the Monday open did more than knock a few dollars off the barrel. It loosened the geopolitical knot that had been tightening around equities, currencies, bonds and central banks for most of July,” Stephen Innes of SPI Asset Management said in a market commentary.
European shares, meanwhile, also moved higher in early trading.
Germany’s DAX index rose 1.6pc to 25,497.42, France’s CAC 40 gained 0.8pc to 8,436.94, and Britain’s FTSE 100 advanced 0.5pc to 10,784.00.
US markets were also poised for a stronger opening, with futures for both the S&P 500 and the Dow Jones Industrial Average rising about 1pc.
The gains come amid rising investor optimism that the pause in fighting between Washington and Tehran could reduce pressure on global energy markets and lower the risk of further economic disruption if negotiations continue.
