By Caroline Valetkevitch and Nell Mackenzie
Oil prices dropped and major stock indexes gained on Monday on signs that U.S.-Iran tensions were easing again, while the yen strengthened against the euro and dollar after the U.S. and Japan confirmed joint intervention to support it.
Oil prices fell sharply after U.S. President Donald Trump held off on a fresh attack on Iran in the hope of sealing a quick deal that could boost oil supplies from the Gulf. U.S. crude was last down 6.07% at $79.53 a barrel and Brent was off at $83.64 per barrel, down 4.88% on the day.
However, Iran said on Monday there were no talks under way with the U.S. and no plans for any meetings.
Optimism over earnings helped to underpin equities. More than 300 of the S&P 500 component companies have reported earnings so far, with roughly 85% of firms beating expectations, according to LSEG data.
“The sharp drop in oil prices, due to Trump’s cancelling severe attacks against Iran and hopes of a diplomatic resolution, set the ball rolling this morning,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
Also a plus for equities, “so far most of the earnings have beat expectations,” and guidance has been upbeat, he said.
Amazon’s (AMZN.O), opens new tab market value topped $3 trillion for the first time on Monday, helped by a sharp rally following strong earnings and signs that the AI boom is driving fresh demand for its cloud-computing services.
The Dow Jones Industrial Average (.DJI), opens new tab rose 512.69 points, or 0.98%, to 52,998.45, the S&P 500 (.SPX), opens new tab rose 96.74 points, or 1.29%, to 7,586.46 and the Nasdaq Composite (.IXIC), opens new tab rose 512.28 points, or 2.02%, to 25,886.13.
MSCI’s gauge of stocks across the globe (.MIWD00000PUS), opens new tab rose 8.86 points, or 0.79%, to 1,129.37. The pan-European STOXX 600 (.STOXX), opens new tab index rose 0.45%.
AstraZeneca (AZN.L), opens new tab investors punished the pharmaceutical firm on Monday over reports of merger talks with U.S. rival Bristol Myers Squibb (BMY.N), opens new tab that could make it one of the world’s biggest drugmakers with a combined value of nearly $400 billion.
Japan’s Nikkei (.N225), opens new tab closed 1% lower, while South Korea’s KOSPI (.KS11), opens new tab slid more than 5%.
Japan and the U.S. conducted coordinated yen-buying intervention and will not hesitate to take further action, Japan’s finance ministry said on Monday, confirming a rare bilateral action to halt the yen’s slide to fresh 40-year lows.
Trump said on Sunday that the U.S. was helping Japan prop up the yen as a sign of friendship and to help the world economy.
The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, rose 0.24% to 99.95, with the euro down 0.18% at $1.1506. Against the Japanese yen , the dollar weakened 0.44% to 156.87.
Tokyo’s solo intervention conducted between late April and early May caused only a brief yen rebound, while a rate hike in June by the Bank of Japan provided little support, underscoring the challenge policymakers face of rising oil prices and a wide interest-rate differential against other major economies.
Elsewhere, U.S. Treasury yields retreated as oil prices fell, even as traders continued to weigh the odds of a Federal Reserve rate hike should the war drag on.
The yield on benchmark U.S. 10-year notes dropped 5.52 basis points to 4.69%. It reached 4.747% on Friday, the highest since January 2025.
The 30-year bond yield fell 4.44 basis points to 5.2306% after peaking at 5.2811% on Friday, the highest since 2007.
Reporting by Caroline Valetkevitch in New York and Nell Mackenzie in London; Additional reporting by Ankur Banerjee in Singapore; Editing by Barbara Lewis and Kevin Liffey
Source: reuters.com