Global stocks rise, oil prices climb on Iran deal hopes and Mideast tensions

A global gauge of stock markets saw modest gains on Monday, buoyed by hopes surrounding an interim peace deal between Iran and the U.S. However, oil prices experienced volatility, climbing over 1% as recent tit-for-tat attacks between the two nations underscored the persistent risk of escalation in the Middle East.

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The market can take some relief in the lower oil prices and its impact on the global economy. Lower oil prices should lead to a diversification trade and growth-sensitive sectors which have suffered in the last few months should outperform.

European stock markets traded lower, with the pan-European STOXX 600 index falling 0.1%. In contrast, Wall Street led the advance, with technology shares rebounding after a selloff last week driven by concerns over artificial intelligence spending. The Dow Jones Industrial Average rose 0.58%, the S&P 500 gained 0.51%, and the Nasdaq Composite climbed 0.79%.

Oil prices, though up for the day, remained sharply lower for the month. Brent crude rose to $72.88 per barrel, and U.S. crude increased to $70.41. Analysts noted that while lower oil prices could benefit the global economy and growth-sensitive sectors, recent U.S. and Iranian actions highlight the fragility of any diplomatic progress.

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There have been several false starts in peace negotiations. I would expect most market participants to remain in a holding pattern through the rest of this week.

Looking ahead, the U.S. economy is focused on Thursday's jobs report. Three consecutive months of stronger-than-expected payrolls have reinforced the Federal Reserve's hawkish stance on interest rates. The dollar index, measuring the U.S. currency against its peers, remained near a 13-month high, reflecting these rate hike expectations.

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There's still plenty of risk facing the oil market. Even so, participants appear to be ... focusing on what a continued recovery in oil flows would mean for the global balance.