Stonix News Business Desk
OIL prices plummeted on Monday as the United States and Iran agreed to pause their recent military exchanges, offering a much-needed respite to Gulf shipping lanes and sending shockwaves through global energy markets.
International benchmark Brent crude tumbled six per cent to around $86 per barrel, while West Texas Intermediate fell 6.8 per cent to $83.22 a barrel, as both nations stepped back from the brink of further escalation.
The reprieve came after weeks of rising tensions that had seen Brent break back above $100 per barrel last week for the first time since May, following Iran’s attacks on shipping vessels in Omani waters within the strategic Strait of Hormuz.
Donald Trump’s UN envoy confirmed the American president was “giving talks some space,” signalling a diplomatic window that investors have been eagerly awaiting.
Markets Rebound on Easing Inflation Fears
The de-escalation eased concerns over a potential resurgence in inflation and further interest rate hikes, providing a lift to equity markets across Asia and Europe.
Frankfurt’s DAX jumped one per cent, while London’s FTSE 100 and Paris’s CAC 40 both closed higher. Tokyo’s Nikkei 225 advanced 0.5 per cent, with Hong Kong’s Hang Seng and Shanghai’s Composite each gaining one per cent.
However, early optimism on Wall Street proved short-lived, with the tech-heavy Nasdaq Composite falling 0.3 per cent in late morning trading as investors offloaded battered technology stocks.
“When a calming of Middle Eastern hostilities fails to provoke a major up day in stocks, you know there is more trouble ahead,” warned Chris Beauchamp, Chief Market Analyst at IG.
The sell-off hit AI chipmaker Nvidia particularly hard, with shares dropping more than five per cent.
Analysts Cautious Despite Lull
Despite the easing tensions, analysts warned that the situation remains volatile.
“Although the situation in the Middle East has calmed, it has not been resolved, and it could make a decline below $85 per barrel tricky at this stage,” said Kathleen Brooks, research director at XTB Trading Group.
David Morrison at Trade Nation noted that “investors are hoping that this could be a precursor to a resumption in peace talks.”
All eyes are now on central bank decisions later this week, with the US Federal Reserve expected to hold rates steady on Wednesday, followed by the Bank of England on Thursday.
“Policymakers face a difficult trade-off between evidence that inflation had been moderating and growing signs that higher oil prices could create a more persistent inflation shock,” observed Jim Reid, managing director at Deutsche Bank.
Record-Shattering IPO in China
In corporate news, Chinese memory chipmaker CXMT stole the spotlight with a staggering 465 per cent surge on its Shanghai debut, having raised $9.8 billion in what Bloomberg News described as China’s biggest mainland tech share sale.
The Anhui-based company briefly rocketed more than 500 per cent to become the mainland’s most valuable firm before paring gains.
Traders are also awaiting earnings from tech giants including Microsoft, Meta, Apple, and Amazon this week, alongside Asian chipmakers SK hynix, Samsung, and Kioxia.
Market Snapshot (1530 GMT):
· Brent Crude: DOWN 6.0% at $86.22
· WTI: DOWN 6.8% at $83.22
· Dow Jones: UP 0.4% at 52,151.86
· S&P 500: DOWN 0.1% at 7,404.63
· Nasdaq: DOWN 0.3% at 24,898.16
· FTSE 100: UP 0.4% at 10,781.75
· DAX: UP 1.0% at 25,361.03
· CAC 40: UP 0.4% at 8,406.06
