Stocks climb, oil and dollar fall on hopes of Iran peace deal

LONDON: Global stocks surged on Monday while oil prices and the US dollar eased as markets reacted to growing hopes of a possible deal to end the Iran conflict, though uncertainty over timing and the reopening of the Strait of Hormuz kept gains in check. The nearly three-month war in the Middle East has driven energy prices higher and reshaped global inflation and interest rate expectations after Tehran effectively shut down the key shipping route, which handles about a fifth of global oil and LNG trade. US President Donald Trump said on Sunday he had instructed negotiators not to rush a deal with Iran, tempering earlier optimism after suggesting that Washington and Tehran had largely agreed on a framework to reopen the waterway. Market sentiment, however, remained sensitive to shifting headlines rather than firm developments. “The tone has been consistently towards some sort of resolution… we’ve become very patient for a resolution deadline,” said Chris Weston, head of research at Pepperstone. Equity markets largely shrugged off comments from Iran’s foreign ministry that a deal was not imminent, focusing instead on risk-on momentum. The pan-European STOXX 600 rose about 1 per cent, while US stock futures pointed higher, with Nasdaq futures up 1.4 per cent and S&P 500 futures gaining 1 per cent. Trading volumes were expected to be thin due to public holidays in several major markets. In Asia, Japan’s Nikkei jumped around 3 per cent, breaking above 65,000 for the first time, while Taiwan’s benchmark index also hit a record high, supported by strong technology and artificial intelligence-related gains. Oil prices, which have been the key driver of global market moves this year, fell sharply to two-week lows. Brent crude dropped nearly 5 per cent to $98.45 a barrel, while US West Texas Intermediate declined to $91.67. Analysts said prices are likely to remain elevated even if a deal is reached, citing ongoing supply chain disruptions. Barclays maintained its 2026 Brent forecast at $100, while warning risks remain tilted to the upside. Safe-haven currencies weakened, with the euro rising 0.3 per cent to $1.1640 and the Japanese yen strengthening slightly against the dollar as investors reduced exposure to risk. Bond markets also rallied, with German 10-year yields hitting their lowest level since early April and Italian yields easing further as demand for government debt strengthened. Meanwhile, shifting energy prices have led investors to reassess interest rate expectations globally, with markets now pricing in a US Federal Reserve rate hike in early 2027, a sharp reversal from earlier expectations of rate cuts this year. The 30-year US Treasury yield briefly touched its highest level since 2007 last week before easing, reflecting ongoing concerns about geopolitical and fiscal risks. Economists warn the Federal Reserve faces a difficult balancing act as higher energy costs pressure inflation while slowing growth and weakening consumer sentiment weigh on demand. The post Stocks climb, oil and dollar fall on hopes of Iran peace deal appeared first on HUM News English.