• Oil prices recorded a significant drop, as the pause in attacks between the US and Iran revived hopes for a ceasefire.

• De-escalation is accompanied by diplomatic efforts, with reports of progress in talks regarding the management of safe navigation in the Strait of Hormuz.

• International markets posted mixed trends, under pressure from investor doubts about the sustainability of investments in artificial intelligence.

• Investment focus shifts to earnings announcements by tech giants and the upcoming monetary policy decision by the US central bank.

Oil prices fell significantly on Monday, as the pause in mutual attacks between the US and Iran boosted hopes for a return to a ceasefire and the resumption of negotiations regarding the opening of the Strait of Hormuz.

Following 13 days of attacks on targets in the Islamic Republic, the United States carried out no new strikes over the weekend, while Donald Trump's envoy to the UN stated that the American President is "giving space to talks."

For its part, Tehran announced that it will halt retaliatory attacks against neighboring countries in the region, offering temporary relief to Gulf shipping and the oil industry.

The two sides had resumed hostilities this month, violating a fragile ceasefire, after Iran's attacks on ships transiting Omani waters in the Strait of Hormuz sparked a new escalation of tension.

This development overturned diplomatic efforts between Washington and Tehran, while the conflict expanded beyond the vital energy corridor. Iranian-backed Houthi rebels in Yemen also attacked Saudi ships in the Bab el-Mandeb Strait, a critical maritime passage to the Red Sea.

Crude oil prices spiked following the resurgence of tension, with Brent surpassing $100 a barrel again last week for the first time since May. However, news that navigation in the Red Sea was proceeding normally helped investors salvage gains on Friday.

Trump's decision to postpone new attacks, alongside statements from Iran on Sunday that progress was made in talks with Oman regarding the management of the Strait of Hormuz, brought significant relief to the markets.

According to Iranian Foreign Ministry spokesman Esmaeil Baghaei, discussions focused on "common principles and operational mechanisms" to ensure the safe passage of ships through the Strait, respecting the sovereign rights of both states.

At the same time, a report indicated that Pakistan is considering the possibility of resuming peace talks between the US and Iran, following an initiative by China.

Both benchmark oil contracts recorded a sharp decline on Monday, with Brent falling at one point by more than 7%, temporarily dropping below $90 a barrel. Specifically, Brent is trading down 3.9% at $92.97 per barrel, while US WTI shows a 4.3% decline at $85.45 per barrel.

Positive developments also reduced concerns over a new surge in inflation and potential interest rate hikes, supporting most stock markets.

However, doubts regarding the sustainability of the artificial intelligence (AI) boom and the massive sums being invested in the sector continue to trouble investors, with tech companies coming under heavy pressure.

Seoul led the losses once again, dropping by over 1%, as shares of SK Hynix and Samsung were back at the center of sell-offs.

Markets in Taipei, Singapore, and Jakarta also moved lower following the surprise resignation of Indonesia's central bank governor, Perry Warjiyo, for personal reasons.

Conversely, Tokyo's stock exchange recorded gains. Stock markets in Hong Kong, Sydney, Shanghai, Wellington, and Manila also moved upward.

Investors eagerly await financial results announcements from SK Hynix, Samsung, and Japan's Kioxia this week, as well as US giants Microsoft, Meta, Apple, and Amazon, with an emphasis on their forecasts and investment plans.

Focus is also centered on the upcoming monetary policy decision of the US Federal Reserve (Fed), in light of the latest developments between the US and Iran and recent data showing a deceleration in inflation.

The probabilities of a new interest rate hike have strengthened over the past week, although most analysts estimate that the Fed will keep interest rates unchanged at its upcoming meeting.

Source: ink.com