News & analysis
Oil's Slide Below $100 Lifts Global Risk Appetite
Brent's brief dip under $100 on Middle East diplomacy hopes eased inflation pressure, pulled European bond yields sharply lower and carried the S&P 500 back to within half a percent of its record.
By PREVICT Research
Key points
- Brent briefly fell below $100 a barrel after Trump said he would be open to meeting Iran's president at the UN, pulling European natural gas lower as well.
- The S&P 500 rose 1.4% to within half a percent of its record high, while the Nasdaq and Magnificent 7 set fresh records.
- European bond yields fell sharply and US Treasury yields declined by less, as traders pared back expectations for further rate hikes, especially in Europe.
Brent crude briefly traded below $100 a barrel as hopes rose for a diplomatic breakthrough in the Middle East, after President Trump said he would be open to meeting Iran's president at the United Nations, according to a Deutsche Bank review of the session. The drop in oil and European natural gas prices eased inflation concerns, supported sovereign bonds and led markets to trim expectations for further rate hikes, particularly in Europe.
The energy move fed directly into risk appetite. The S&P 500 climbed 1.4% and returned to within half a percent of its record high, while the Nasdaq and the Magnificent 7 group of megacaps notched fresh records. Meta surged on enthusiasm around its Muse AI agent, and AMD jumped after reaching a $1 trillion valuation. Bitcoin moved back above $85,000.
Bonds rallied alongside equities. Yields fell sharply across Europe, with smaller declines in US Treasuries, as the drop in energy prices reduced the inflation impulse that had been feeding expectations for further tightening. The repricing was most pronounced in Europe, where natural gas prices also fell.
The constructive tone survived a partial oil rebound. Overnight, crude recovered somewhat after Treasury Secretary Scott Bessent threatened tougher sanctions on Iranian airlines and service providers, but the broader market tone remained more positive. Some hawkish Federal Reserve commentary also failed to derail the momentum, with easing energy prices and renewed AI optimism keeping the bid intact.
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