Global markets surge as oil prices fall, US-China trade hopes grow

Global stock markets experienced a surge on Monday, propelled by falling oil prices and optimistic signals from trade discussions between Chinese and U.S. officials. The Nasdaq index surged 2.3 percent, breaking a new record high. This positive momentum followed last week's market decline due to the Federal Reserve's interest rate hike aimed at combating inflation, exacerbated by the escalating cost of energy post-U.S.-Israeli conflict with Iran.

Susannah Streeter, chief investment strategist at Wealth Club, suggests that falling oil prices are easing the inflation worry, as crude prices rebounded due to increased expectations of a breakthrough in the Iran conflict after fresh negotiations.

Oil prices plummeted around four percent on Monday after U.S. President Donald Trump expressed willingness to meet with Iranian President Masoud Pezeshkian. During the upcoming UN General Assembly this week, Iranian President Masoud Pezeshkian will travel to New York. Brent crude, the benchmark international contract, briefly dipped under US$100 (RM407) per barrel. The drop in oil prices has facilitated a relief trade in sovereign bond markets, providing some relief to equity markets.

Major Wall Street indices remained in positive territory throughout the day, with AMD, a chipmaker, gaining the spotlight due to its surge in value driven by the AI boom. In Europe, London saw a 0.8 percent increase, while Paris and Frankfurt gained approximately one percent. Political instability in Germany, including Chancellor Friedrich Merz's center-right CDU party's two regional election losses to far-right and far-left parties, was deemed a non-issue by investors.

U.S. and Chinese economic officials met on Sunday for significant trade and AI talks ahead of a summit on Thursday between President Trump and Chinese President Xi Jinping in Washington. Officials discussed establishing a 'US-China AI dialogue' to exchange information about the technology and its potential risks. Hong Kong's main index climbed 1.2 percent, Shanghai's shares rose by one percent, and South Korea's tech-heavy benchmark ended the day up 1.7 percent.

Tokyo was closed for a public holiday. The primary focus of the Trump-Xi talks was the potential Chinese cooperation on Iran, which could alleviate the recent oil and bond market volatility. Streeter hopes for an extension of the trade truce, which ends on November 10, and the possibility of lower tariffs.