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Global stock markets rallied on Monday as oil prices and bond yields pulled back from sharp gains recorded the previous week. The S&P 500 climbed 1.5 per cent, bringing it to within 0.4 per cent of its all-time high set last month. The Dow Jones Industrial Average gained 348 points, or 0.7 per cent, by 2:20 p.m. Eastern time, while the Nasdaq composite rose 2.2 per cent.
Oil Prices Pull Back from Recent Highs
Brent crude oil fell 3.4 per cent to $100.29 USD per barrel on Monday. That marks a notable retreat from the nearly $110 per barrel it touched last week. However, prices remain significantly above the roughly $72 level seen earlier this summer.
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Oil prices have swung sharply in recent weeks. Ongoing conflict involving Iran has disrupted supply flows through the Strait of Hormuz, though some crude shipments continue to move through the waterway. The disruption remains far below what the industry and consumers need.
Morgan Stanley’s Michael Wilson identified a further rise in oil and gasoline prices as the main near-term risk that could prevent U.S. stocks from reaching his year-end target. Meanwhile, the average price of a gallon of regular gasoline across the United States climbed to nearly $4.48 USD, according to AAA. That compares to less than $4.32 USD just one week earlier and $3.18 USD a year ago.
Bond Yields Ease After Crossing Key Threshold
The retreat in oil prices also helped relieve pressure in the bond market. The yield on the 10-year U.S. Treasury note eased to 4.97 per cent on Monday. That followed a close of 5.01 per cent on Friday, after yields crossed above the five per cent mark last week for the first time in three years.
Yields have climbed steadily due to concerns about inflation and rising government debt levels worldwide. High yields make borrowing more expensive for governments, businesses and households alike, adding broader pressure to the economy.
ING commodities strategists Ewa Manthey and Warren Patterson noted in a Monday commentary that supply concerns persist. However, they said investor profit-taking after recent oil price gains, combined with hopes for productive diplomatic talks, helped lift market sentiment.
U.S.-China Talks Boost Market Optimism
Diplomatic developments between the United States and China also supported the positive mood in markets. U.S. Treasury Secretary Scott Bessent told reporters on Sunday that talks with Chinese Vice Premier He Lifeng in New York had been “a very successful engagement.” Bessent said the discussions covered trade and artificial intelligence.
The two countries are currently discussing reciprocal tariff reductions on $30 billion worth of goods from each side. In addition, China’s Foreign Ministry confirmed on Monday that President Xi Jinping will make a state visit to the United States between September 23 and 25. Experts expect trade, tariffs, AI safety, and Middle East developments to feature prominently on the agenda. Ties between China and Iran may also come up during the visit.
AI and Crypto Stocks Stabilize
On Wall Street, artificial intelligence stocks continued to recover after a broad global sell-off at the start of last week. AI industry leaders have recently called for a slowdown in the sector’s development, citing safety concerns for humanity.
Cryptocurrency-linked stocks also rallied on Monday. Bitcoin climbed back above $85,000, returning to levels last seen in January. That recovery lifted shares across the crypto sector.
Global markets broadly followed Wall Street higher. France’s index gained 0.9 per cent, Hong Kong rose 1.2 per cent, and South Korea advanced 1.6 per cent. The easing of both oil prices and bond yields provided the main catalyst for the worldwide market gains.
