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

AFP | Manama

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Global stock markets rallied on Monday, September 21, as falling oil prices, easing Treasury yields and renewed optimism over US-China diplomacy helped improve investor sentiment.

Wall Street led the gains, with technology and artificial intelligence stocks driving the rebound. The S&P 500 rose about 1.1%, while the Nasdaq Composite gained around 1.6%. Chipmaker AMD surged more than 9%, briefly taking its market value above $1 trillion, while Intel also posted a sharp gain.

A major boost for markets came from a decline in crude prices. Brent crude fell more than 3%, while US crude also declined sharply. Investors reacted to signs that additional Saudi oil supplies were reaching global markets and to hopes for diplomatic progress in the Middle East. Saudi crude exports were estimated to have recovered to slightly above 4 million barrels per day in September, according to Kpler data cited by Reuters.

Lower oil prices eased some of the inflation concerns that have weighed on markets following recent central-bank tightening. The US 10-year Treasury yield also moved lower, providing additional support for equities, particularly growth and technology shares.

US-China Talks Boost Confidence

Investor sentiment was also supported by high-level US-China discussions ahead of an expected meeting between US President Donald Trump and Chinese President Xi Jinping.

US Treasury Secretary Scott Bessent said Washington and Beijing had agreed to establish a formal dialogue on artificial intelligence, including an "incident line" to improve communication during major AI-related safety incidents. The two sides also discussed trade, although no extension of the current US-China trade truce was confirmed.

The upcoming Trump-Xi summit is expected to address trade, technology and broader geopolitical issues. Markets are watching for signs that the two countries can maintain a more stable trading relationship.

Tech Stocks Lead the Rebound

The rally extended across major markets in Asia and Europe, with semiconductor and artificial intelligence companies among the strongest performers.

The combination of stronger AI-related demand, lower oil prices and easing bond yields helped reverse some of the pressure seen in global markets during the previous week.

However, investors remain focused on inflation and the possibility of further US Federal Reserve rate increases. Reuters reported that markets were still pricing in a meaningful chance of another rate hike as policymakers continue to monitor persistent inflation pressures.

Monday's gains therefore reflected a combination of lower energy costs, stronger technology demand and improved diplomatic expectations, while investors continued to assess the risks surrounding inflation, interest rates and geopolitical tensions.