Global markets rebound as oil falls below $102 on Iran peace hopes

Global equity markets and U.S. futures surged on April 1, with oil prices falling sharply on rising optimism for a swift resolution to the war between the U.S. and Iran that has battered assets for the past month.

"Energy‑driven stagflation risks are supporting the USD in the near term," strategists at OCBC said in a note. "A softer USD may emerge if oil prices fall."

The rally marks a sharp reversal from a brutal March, during which global equities sold off, government bond prices tumbled, and commodities were gripped by extreme volatility. The global benchmark Brent Crude Index, which had previously skyrocketed, saw futures contracts for June delivery fall to $101.67 per barrel, briefly dipping below the $100 mark. The U.S. Dollar Index, which had gained nearly 3 percent in March, eased its advance.

The potential for a de-escalation in the conflict offers a reprieve for markets that had been pricing in a significant economic slowdown. "The balance of risks has worsened for equity markets and the probability of a stagflationary outcome has increased," Goldman Sachs strategists said in a recent note, a scenario that now appears less likely to investors.

March Carnage in Review

The optimism-fueled rally follows a punishing five weeks for nearly every asset class. Concerns over the war's impact on energy and inflation dragged equities lower across the globe.

In the U.S., all three major averages ended March in negative territory. The impact was more severe in markets dependent on energy imports. South Korea’s Kospi index, a top performer in 2025, plunged nearly 20 percent in March due to the country's sensitivity to energy shocks. In Europe, government bond yields surged to multi-decade highs as investors priced in more aggressive central bank action to combat inflation, which hit 2.5 percent in the euro zone for March.

Cross-Asset Rebound

The reversal on April 1 was broad-based. Alongside the drop in oil prices, assets that had been under pressure caught a bid. Gold, which suffered its worst monthly performance since 2008, saw prices stabilize around the $4,500 an ounce level.

Government borrowing costs also eased, with bond yields moving lower as inflation expectations cooled slightly. The improved outlook for global growth provided a tailwind for industrial metals like copper, which had previously sold off on rising economic pessimism.

This article is for informational purposes only and does not constitute investment advice.