By Isla Binnie
NEW YORK (Reuters) -Stock indexes closed higher after last week’s losses and a barrel of oil got $1 cheaper on Monday as investors took heart from reports that Iran was seeking to end hostilities with Israel, and stayed confident in their predictions for a busy week of central bank meetings.
Oil prices fell after the Wall Street Journal reported Iran was seeking a truce following an attack by Israel on Friday that raised fears of wider conflict, sent oil prices soaring, and weighed on stocks.
Sources told Reuters that Iran has asked regional allies to press U.S. President Donald Trump to influence Israel to agree to a ceasefire.
Geopolitics still loomed, with early cracks threatening to emerge among Group of Seven leaders, who are meeting in Canada. Officials gave conflicting statements about whether Trump would sign a draft statement calling for de-escalation of the Israel-Iran conflict.
“In terms of an escalation, where the U.S. is going to get involved or where it’s really going to be all-out war, where nothing is sacred anymore, I don’t think that’s going to happen,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“It’s probably a short-lived situation, so I think the market is rallying on that.”
Following a torrid session on Friday, Brent crude futures settled at $73.23 per barrel, down $1 or 1.35%.
The Dow Jones Industrial Average ended 0.75% higher, the S&P 500 was up 0.94% and the Nasdaq Composite gained 1.52%.
MSCI’s gauge of stocks across the globe marched 1.09% higher after the U.S. open and stayed stronger on the day to be quoted up 0.88% after the U.S close.
Earlier in the trading day, Europe’s STOXX 600 was boosted by a rebound in travel stocks and Gulf stocks also recovered. [.EU]
Chinese blue chips gained after data showed rising retail sales and industrial output in line with expectations. [SS]
FED MEETING IN FOCUS, MORE DATA TO COME
A prolonged rise in oil prices could contribute to inflation, but movements of recent days are unlikely to strongly influence discussions when the Federal Reserve meets on Wednesday, said Emily Roland, co-chief investment strategist at Manulife John Hancock Investments.
“The Fed is data-dependent, and it takes time for the impact of oil prices (higher or lower) to feed into the inflation numbers,” Roland said.
“In our view, the Fed likely keeps the markets waiting with no change to the view of between two to three rate cuts of 0.25% by the end of the year. The bond market is still pricing in two cuts over the year, we will see if this week changes things.”
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