Global stocks rally on lower oil prices, US-China hopes

Stock markets climbed on Monday, boosted by falling oil prices and positive signals from trade talks between Chinese and US officials over the weekend.

Stocks had come under pressure last week after the US Federal Reserve raised interest rates to curb inflation pressures, in part from soaring energy costs from the US war against Iran.

But with oil falling further Monday, "The pressure cooker of worry about inflation is giving off less steam as crude prices have fallen back amid growing hopes that fresh negotiations could lead to a breakthrough in the Iran conflict," said Susannah Streeter, chief investment strategist at Wealth Club.

Oil prices dropped more than three per cent on Monday after US President Donald Trump signalled he would be open to meeting with Iranian President Masoud Pezeshkian, who will travel to New York for the UN General Assembly this week.

Florian Ielpo at Lombard Odier bank also noted that "Saudi exports rose to reach a little more than four million barrels per day in September compared to 2.4 million in August, while reports indicate that a part of the damaged East-West oil pipeline could reopen quickly".

The drop in oil price also "has helped drive a relief trade in sovereign bond markets that has afforded equity markets some relief", said Patrick O'Hare at Briefing.com.

Wall Street opened higher, with the Dow gaining 0.7 per cent.

In Europe, the London, Paris and Frankfurt stock markets were around one per cent higher in afternoon trading.

Investors brushed off fresh political difficulties for German Chancellor Friedrich Merz, whose centre-right CDU party suffered two regional election defeats at the hands of far-right and far-left parties.

US and Chinese economic officials met Sunday for closely watched talks on trade and artificial intelligence, ahead of a summit on Thursday between Trump and Chinese President Xi Jinping in Washington.

US Treasury Secretary Scott Bessent said that after lengthy conversations, the two countries had discussed setting up a channel called "US-China AI dialogue" to share information about the technology and its potential risks.

Hong Kong's main index rose 1.2 per cent Monday while shares in Shanghai rose one per cent, and South Korea's tech-heavy benchmark finished the day up 1.7 per cent. Tokyo was closed for a public holiday.

At the talks between Trump and Xi, "the area with the most potential to move markets is probably any Chinese cooperation on Iran, given recent oil and bond market volatility," said Thomas Mathews of Capital Economics.

Streeter said "there are hopes that the trade truce, which is due to expire on November 10, will be extended, and that potentially lower tariffs could be brokered".

Brent North Sea Crude: DOWN 3.1 per cent at $100.64 per barrel

West Texas Intermediate: DOWN 3.8 per cent at $96.49 per barrel

New York - DOW: UP 0.7 per cent at 52,027.70 points

New York - S&P 500: UP 0.6 per cent at 7,697.62

New York - Nasdaq Composite: UP 0.8 per cent at 26,725.98

London - FTSE 100: UP 0.9 per cent at 10,755.61

Paris - CAC 40: UP 1.1 per cent at 8,149.46

Frankfurt - DAX: UP 1.1 per cent at 25,593.74

Hong Kong - Hang Seng Index: UP 1.2 per cent at 25,042.71 (close)

Shanghai - Composite: UP 1.0 per cent at 3,949.91 (close)

Tokyo - Nikkei 225: closed for a holiday

Dollar/yen: UP at 157.31 yen from 156.73 yen on Friday

Euro/dollar: DOWN at $1.1480 from $1.1487

Pound/dollar: DOWN at $1.3393 from $1.3395

Euro/pound: DOWN at 85.73 pence from 85.76 pence