Global equities advanced last week while oil prices fell sharply, as easing geopolitical tensions between the United States and Iran lifted investor sentiment ahead of planned ceasefire talks.
On Wall Street, all three major indices posted strong weekly gains of more than three percent, buoyed by improved risk appetite despite lingering uncertainty over the durability of the truce.
However, trading on Friday reflected caution. The Dow Jones Industrial Average fell 0.6 percent, while the Nasdaq Composite rose 0.4 percent. The broader S&P 500 edged down 0.1 percent.
Analysts said markets were balancing optimism over diplomatic progress with concerns about unresolved risks, particularly around global energy supply.
“Markets are trading on a cautious tone ahead of the US-Iran ceasefire talks,” said Elias Haddad of Brown Brothers Harriman. “For financial markets, the key issue is whether peak shipping security fear is now behind us.”
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Oil prices, which had surged earlier amid supply disruption fears, declined significantly as tensions appeared to ease. Crude prices dropped about 13 percent over the week, reflecting expectations that supply routes could stabilise if negotiations progress.
Attention is focused on upcoming talks in Islamabad, where officials are expected to discuss Iran’s nuclear programme and the safe passage of oil shipments through the strategically vital Strait of Hormuz.
The narrow waterway is a critical chokepoint for global oil trade, with a significant share of the world’s crude passing through it daily. Any disruption to shipping in the area tends to have immediate effects on global energy prices.
Since the ceasefire announcement, Donald Trump has expressed dissatisfaction with Iran’s handling of the situation, particularly regarding the reopening of the strait.
“The key issue for the oil market is whether ship traffic through the Strait of Hormuz will resume,” said Carsten Fritsch of Commerzbank. “So far, there are no signs of this happening.”
Meanwhile, economic data from the United States added another layer of complexity for investors. Inflation accelerated in March, with consumer prices rising 3.3 percent year-on-year, driven in part by higher energy costs linked to earlier disruptions.
Despite the uptick, the White House said the economy remained resilient. Spokesperson Kush Desai said the US economy was “on a solid trajectory,” signalling confidence in underlying growth.
In Europe, stock markets showed more muted movements. London and Frankfurt ended largely unchanged, while Paris posted a modest gain of 0.2 percent.
Analysts say markets are likely to remain sensitive to developments in the Middle East, particularly any signs of progress or setbacks in diplomatic efforts.
While the easing of tensions has provided temporary relief to investors, uncertainty over energy flows and geopolitical stability continues to shape the outlook for both equities and commodities.
Investors are expected to closely monitor the outcome of the Islamabad talks, as well as shipping activity in the Strait of Hormuz, for clearer signals on the direction of oil prices and broader market sentiment.
