Two months ago, the U.S. and Israel started a joint assault on Iran, markets sold off, oil spiked, and investors braced for a long conflict.
Monday looked nothing like that.
European indexes added another day to their winning streak, their fifth in a row, while Japan's Nikkei 225 broke a record and oil dropped over 5%. The trigger was a single Truth Social post from President Trump saying talks with Iran were going well.
What Moved And By How Much
The pan-European Stoxx 600 climbed over 0.8% by Monday afternoon in London, putting the index at its highest level since March 2 - right before the war started.
The CAC 40 in France was up 1.8% and Germany's DAX rose 1.6%. Volumes were lighter than usual because the U.K.'s FTSE 100 was closed for a holiday, but the move was broad.
Asia ran the same playbook overnight, with Japan's Nikkei 225 punching through 65,000 for the first time in history. That is the kind of move you see when a major risk gets pulled off the table all at once.
Bond yields agreed. Germany's 2-year Bund yield, which moves with rate expectations, dropped more than 9 basis points to land at 2.546%, the lowest reading since May 8.
When yields drop like that, it means investors think central banks will not have to raise rates as much to fight inflation.
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Why Oil Fell So Hard
The big one is the Strait of Hormuz. Roughly a fifth of the world's oil moves through that narrow waterway between Iran and Oman, and any disruption there sends crude prices flying.
Reports over the weekend suggested it could reopen soon. Pair that with Trump posting that negotiations were "proceeding in an orderly and constructive manner," and oil traders headed for the exits.
Crude fell over 5% in a single session, easing pressure on investors who had been bracing for a longer fight.
Trump also said he had instructed his team "not to rush into a deal" because "time is on [their] side." In plain English: the U.S. is not in a hurry, which suggests Washington thinks it has leverage in the ongoing talks.
For investors, the read-across is clean: lower oil means lower inflation pressure, which means central banks can sit on their hands, which means stocks have more room to run.
Worth Noting
In corporate news Monday, Delivery Hero shares jumped over 10% after reports that Uber was preparing a higher takeover offer for the German company.
But the bigger story is the macro one. A war that pushed markets lower is now pushing them higher on the way out, with five straight days of European gains, a record in Tokyo, and oil down 5% in a session.
Peace, even partial peace, gets priced in fast.
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