Global shares saw an uplift on Monday as oil prices dropped significantly, falling over $4, after U.S. President Donald Trump indicated progress in talks with Iran aimed at ending the current conflict. France’s CAC 40 increased by 1.1% to reach 8,203.32, while Germany’s DAX grew by 1.0% to 25,148.39. The UK’s FTSE 100 rose slightly by 0.2% to 10,466.26. U.S. markets remained closed for the Memorial Day holiday.
In Asia, Japan’s Nikkei 225 surged by 2.9%, closing at 65,158.19. Australia’s S&P/ASX 200 increased by 0.4% to 8,692.00, and China’s Shanghai Composite gained almost 1% to finish at 4,152.57. Markets in South Korea and Hong Kong were closed due to holidays for Buddha’s birthday.
The United States is reportedly nearing an agreement with Iran, which aims to end the war and reopen the Strait of Hormuz. This agreement would also require Iran to relinquish its stockpile of highly enriched uranium. Regional officials shared these developments with The Associated Press, highlighting their potential impact on global markets.
The closure of the Strait of Hormuz, an essential route for global oil shipments, has restricted tanker movements from the Persian Gulf. Japan, which imports nearly all its oil through the strait, is one of the affected nations.
According to analyst Stephen Innes, markets are shifting from focusing on geopolitical risks to anticipating a “peace dividend” resulting from the expected reopening of the strait, which has put downward pressure on both oil prices and the dollar.
On Friday, before the U.S. holiday, the S&P 500 rose by 0.4%, the Dow industrials increased by 0.6%, and the Nasdaq composite went up 0.2%.
The benchmark U.S. crude oil price fell by $4.77, more than 4%, to $91.83 per barrel. Brent crude dropped by $4.86 to $98.68 per barrel. In currency developments, the U.S. dollar weakened to 158.95 Japanese yen from 159.16 yen, and the euro saw a slight increase, costing $1.1644 compared to $1.1605.
Recent positive earnings reports from U.S. companies have provided support to markets, despite ongoing concerns about inflation as the conflict persists.
Yuri Kageyama reports on Threads: https://www.threads.com/@yurikageyama
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