Brent crude fell more than 5%, easing inflation concerns and supporting equities and government bonds, although continued attacks on Saudi energy infrastructure kept geopolitical risks elevated.
MARKET INSIDER — Global stocks and government bonds made cautious gains on Monday after a pause in direct US-Iran fighting pushed oil prices sharply lower, reducing near-term inflation fears ahead of major central-bank decisions and technology earnings.
Brent crude dropped 5.2% to $91.73 a barrel, while US West Texas Intermediate fell 5.4% to $84.45. The retreat supported US and European equity futures and pulled Treasury yields lower, but investors remained wary because Iran-aligned Houthi forces continued attacking Saudi oil infrastructure near the Red Sea.
Key highlights
- Brent crude fell 5.2% to $91.73, while WTI declined 5.4% to $84.45. S&P 500 futures advanced 0.7%, and Nasdaq futures rose 1.1%.
- The US 10-year Treasury yield fell four basis points to 4.63%. Markets priced approximately a one-in-three probability of a Federal Reserve rate increase.
- Microsoft, Meta, Amazon, Apple and Qualcomm are among the companies reporting this week.
- Chinese chipmaker CXMT surged 470% in its Shanghai debut. Singapore unexpectedly tightened monetary policy through its exchange-rate framework.
Oil falls as direct US-Iran attacks pause
Iran said it would suspend its attacks for as long as the United States refrained from further bombing. No new direct strikes by either side were reported over the weekend following 13 consecutive nights of US attacks and Iranian retaliation.
Washington said the pause was intended to create additional room for diplomacy. However, the arrangement is conditional and has not been formalised as a ceasefire.
The apparent de-escalation reduced the immediate risk of disruption around the Strait of Hormuz, through which approximately one-fifth of global oil flows passed before the conflict. That was enough to remove part of the geopolitical premium accumulated in crude prices during the fighting.
The decline in oil provided relief to markets concerned that higher energy costs could revive inflation and force central banks to maintain restrictive monetary policy for longer. Brent nevertheless remained above $90, indicating that traders continue to price in significant regional supply risk, according to Reuters.
Red Sea attacks limit market optimism
The improvement in sentiment remained guarded because Yemen’s Iran-aligned Houthi forces continued targeting Saudi energy installations along the Red Sea coast.
Those attacks represent a separate risk from the direct exchange between Washington and Tehran. Even if the US-Iran pause holds, damage to Saudi oil facilities or renewed disruption to Red Sea shipping could push energy and transportation costs higher.
The Gulf conflict therefore remains capable of affecting two critical maritime corridors: the Strait of Hormuz and the Red Sea route leading toward the Suez Canal.
For markets, a durable decline in oil will require more than a temporary halt in US and Iranian strikes. Investors will look for evidence of formal negotiations, safer commercial shipping and restraint from regional armed groups.
Stocks advance as yields retreat
US equity futures responded positively to the decline in oil and bond yields. S&P 500 futures gained 0.7%, while technology-heavy Nasdaq futures rose 1.1%.
European markets also pointed higher, with EURO STOXX 50 futures up 0.4% and Germany’s DAX futures gaining 0.6%. FTSE futures were little changed.
Asian trading was more mixed. Japan’s Nikkei edged 0.1% higher, while South Korea’s chip-heavy benchmark fell 1.1%. MSCI’s broad index of Asia-Pacific shares outside Japan was broadly flat, and China’s CSI 300 gained 0.4%.
The restrained response suggests investors see the oil decline as helpful but insufficient to remove the broader uncertainty surrounding monetary policy, corporate valuations and Middle East security.
Fed decision remains unusually uncertain
The Federal Reserve is scheduled to announce its policy decision on Wednesday. Markets implied approximately a one-in-three probability of a rate increase, although most economists expected the central bank to leave rates unchanged.
Uncertainty is higher than usual because Fed policymakers have recently been divided, Chair Kevin Warsh’s position has remained unclear, and part of the renewed US-Iran escalation occurred during the central bank’s communications blackout period.
Softer US inflation data for June may give policymakers a reason to wait, especially after oil prices retreated. However, officials could still signal that further tightening remains possible if energy costs produce broader price pressures.
Goldman Sachs economists expected at least one policymaker to dissent in favour of an increase but said most voting officials were unlikely to support an immediate move.
The Bank of England will meet on Thursday, followed by the Bank of Japan on Friday. Both are expected to hold their policy settings steady while emphasising continuing inflation risks.
The drop in oil helped the US 10-year Treasury yield fall four basis points to 4.63%. Lower yields also weakened the dollar, allowing the euro to rise 0.3% to $1.1408. The dollar declined 0.2% against the yen to 163.54.
Big Tech earnings face demanding expectations
Corporate results could become the week’s dominant market driver once the central-bank decisions are announced.
Approximately one-third of S&P 500 companies are scheduled to report. Aggregate earnings are projected to increase 26.5% from a year earlier, according to LSEG IBES data.
Microsoft, Meta Platforms, Amazon, Apple and Qualcomm are among the most closely watched companies. Their reports will be assessed not only for revenue and profit growth but also for evidence that enormous spending on artificial intelligence infrastructure is producing adequate financial returns.
Expectations are high enough that even strong earnings may disappoint investors if capital expenditure rises faster than sales or management guidance.
The scale of AI financing under consideration was highlighted by a Wall Street Journal report that Nvidia was discussing a potential backstop of approximately $250 billion for OpenAI as part of a data-centre project. The figure underscores both the extraordinary capital requirements of AI development and the concentration of market expectations around continued infrastructure investment.
CXMT surges in blockbuster Shanghai debut
China’s semiconductor sector delivered one of the session’s most dramatic moves. Memory-chip producer CXMT rose approximately 470% from its initial public offering price in its Shanghai debut.
The company raised 57.92 billion yuan, or about $8.6 billion, in Asia’s largest IPO of 2026. Its shares jumped from an offer price of 8.66 yuan to approximately 49.50 yuan, giving the company an initial market value of about 3.3 trillion yuan.
Only 6.73% of CXMT’s shares were immediately available for trading, limiting supply and contributing to the extraordinary price increase. The debut reflects investor enthusiasm for Chinese semiconductor self-sufficiency and AI-related memory demand, but the restricted free float means the first-day valuation may not represent a stable long-term market assessment, Reuters reported.
Singapore tightens policy despite oil pullback
The Singapore dollar strengthened slightly after the Monetary Authority of Singapore unexpectedly tightened monetary policy.
MAS said it would “very slightly” increase the rate of appreciation of its Singapore dollar nominal effective exchange-rate policy band. It left the band’s width and central level unchanged.
Unlike most major central banks, MAS conducts monetary policy primarily through the exchange rate rather than a conventional policy interest rate. Allowing the currency to appreciate more quickly can reduce the cost of imported goods and help contain inflation.
The decision indicates that Singapore remains concerned about medium-term price pressures despite Monday’s decline in oil. Energy prices are still substantially elevated, while the city-state’s strong trade exposure makes it particularly sensitive to imported inflation, Reuters citied.
Gold gains as Treasury yields decline
Gold rose 1.3% to $4,103 an ounce as lower Treasury yields reduced the opportunity cost of holding the non-interest-paying metal.
The move shows that investors have not fully abandoned defensive assets despite the more constructive tone in stocks. Gold benefited from both the retreat in yields and continuing uncertainty over the durability of the US-Iran pause.
For Asian and emerging economies, a sustained decline in oil would ease pressure on inflation, currencies and current-account balances. Energy-importing countries would benefit most, while oil exporters could experience lower fiscal and export revenues if prices continue falling.
The immediate outlook depends on whether the military pause holds, whether the Federal Reserve changes interest rates and whether major technology companies can justify the market’s elevated earnings expectations. Monday’s gains reflect reduced short-term risk—not confidence that the underlying geopolitical and economic uncertainties have been resolved.
