Global equity markets rallied Tuesday as investors returned to technology stocks following recent losses, while oil prices fell after Israel and Iran agreed to halt attacks, easing geopolitical tensions in energy markets.
European shares advanced, with the STOXX 600 index rising about 0.7 percent, led by gains in semiconductor and industrial technology firms such as ASML and Infineon.
US stock futures also pointed higher, up between 0.5 and 0.8 percent, with broad-based gains across major listed companies including Meta, Eli Lilly and Goldman Sachs as investor appetite for risk assets improved.
Market sentiment was boosted by renewed enthusiasm for artificial intelligence-linked firms, following reports that OpenAI has confidentially filed for an initial public offering, ahead of anticipated listings by other major technology firms.
Analysts said investor excitement around AI continues to drive equity flows into mega-cap technology stocks, even as caution persists over stretched valuations and tightening financial conditions.
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Oil prices retreat on easing geopolitical risk
In energy markets, Brent crude fell about 1.75 percent, easing back from recent highs as fears of supply disruptions eased after Israel and Iran agreed to suspend attacks.
The decline reflects reduced immediate concerns over Middle East shipping routes, particularly through the Strait of Hormuz, a key global oil transit chokepoint.
Despite the drop, oil prices remain elevated compared to earlier in the year, supported by ongoing geopolitical uncertainty and constrained maritime flows.
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Bond yields and monetary policy pressure
Financial markets remain sensitive to interest rate expectations, with US 10-year Treasury yields holding above 4.5 percent and long-dated bonds continuing to face pressure.
Thirty-year yields have spent more time above 5 percent this year than in any period since 2007, according to market data, reflecting investor concern over persistent inflation and rising government borrowing costs.
Analysts said inflation remains “sticky,” with a majority of global central banks still struggling to bring price growth back within target ranges, contributing to tighter financial conditions across markets.
Currency and policy outlook
The US dollar remained firm, supported by strong employment data and expectations that the Federal Reserve could raise rates again later this year. Markets are pricing in a rising probability of a rate hike by October, with a move by December almost fully expected.
The dollar traded around 160 yen, a level closely watched by Japanese authorities for potential intervention. The euro and pound both posted modest gains against the dollar after recent weakness.
In Europe, investors expect the European Central Bank to continue tightening policy, with markets pricing in further rate increases later this year.
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Outlook
While equity markets have regained momentum, analysts warned that gains remain uneven and vulnerable to shifts in monetary policy expectations and inflation data.
Attention now turns to upcoming US inflation figures and corporate earnings from major technology firms, which are expected to provide further direction for global risk appetite in the coming weeks.
