Global equity markets rallied on Monday as Brent crude prices retreated, driven by emerging optimism over diplomatic negotiations between the United States and Iran.
The improved geopolitical outlook has reduced risk aversion across asset classes, prompting a synchronized move higher in stocks and lower in energy benchmarks.
Brent crude softened in the session as traders priced in a reduced probability of supply disruptions stemming from tensions in the Strait of Hormuz.
The decline in oil prices reflects a shift in market sentiment from geopolitical risk premium to a more stable supply outlook, following reports of tangible progress in talks between Washington and Tehran.
The diplomatic breakthrough has also rippled through fixed-income markets.
US Treasury yields fell as investors scaled back expectations for near-term interest rate hikes.