Equities rallied as oil prices fell, with US diplomatic efforts fuelling cautious optimism that tensions in the Middle East may begin to ease. Asian equities rose 1.9%, while US and European futures pointed higher, as a pullback in crude helped ease inflation concerns and reduced pressure on central banks to tighten policy further. Brent crude dropped sharply, briefly falling below $98, as reports of a potential ceasefire and a broader US plan to end the conflict supported sentiment. While some of the early optimism faded, the move in oil remains central, with markets closely watching for any signs of progress around the Strait of Hormuz.
The rebound highlights how sensitive markets remain to geopolitical headlines, with recent weeks marked by sharp swings across asset classes. Lower oil prices are helping support risk assets, as well as XAU, which has rebounded sharply from $4,100 on Monday, though uncertainty remains around how durable any easing in tensions will prove.
UK CPI has just come in in line with expectations at 0.4% MoM and 3% YoY. The rest of the day is quite light on the data front, with US Mortgage Applications due later today.
• S&P 500 futures +0.7%
• Nasdaq 100 futures +0.7%
• Euro Stoxx 50 futures +1.1%
• US 10-year yield unchanged ~4.35%
• Bitcoin +1.6% to $71,167
• Gold +1.7% to $4,549
• WTI −3.4% to $89.24
