Share markets across Asia moved higher on Monday, while bonds also gained, after oil prices fell sharply on signs of a pause in fighting in the Gulf. The drop in crude gave investors some relief by reducing near-term concerns that energy costs could drive inflation higher again.
Lower oil prices tend to ease pressure on consumer prices and can improve the outlook for interest rates, which helped support both equities and bonds. With inflation fears cooling, investors appeared more willing to buy risk assets while also pushing into fixed income.
The market rebound comes at the start of a closely watched week for global investors, with central bank meetings and a fresh round of corporate earnings expected to shape sentiment. In that environment, any shift in the inflation picture can quickly influence expectations for monetary policy and economic growth.
For now, the slide in oil has offered a welcome break for markets that had been unsettled by geopolitical tensions. Whether that relief lasts may depend on developments in the Gulf as well as the signals policymakers and companies deliver in the days ahead.
