Global markets surged in early Monday trading after the United States and Iran both stepped back from two weeks of escalating military strikes, sending oil prices into a sharp decline and triggering a broad risk-on rally across equities, bonds, and gold. Brent crude fell as much as 7.8% to $89.23 a barrel in early London trade, briefly breaching the key $90 support level, before paring some losses. West Texas Intermediate similarly dropped around 6.7% to $83.30.
The de-escalation began late Friday when the US military ceased airstrikes against Iran without a formal announcement, having conducted 13 consecutive nights of operations. A senior Iranian official confirmed to Reuters on Sunday that Tehran would halt its retaliatory campaign under an 'attack for attack' posture as long as Washington holds its pause, with Iran passing that message through Omani intermediaries. UN Ambassador Mike Waltz said President Trump was 'giving the talks some space' before deciding whether to resume operations.
Equity futures responded sharply. Nasdaq-100 futures rose roughly 1.4%, S&P 500 futures gained 0.9%, and Dow futures climbed 1%, reversing a choppy prior week that left the Nasdaq Composite off 0.64% and the S&P 500 up just 0.05% on Friday. Prediction markets put the odds of a higher S&P 500 open at 88%, per Polymarket data published Monday morning.
The geopolitical backdrop sets the stage for what analysts are calling the busiest and highest-stakes week of the entire Q2 2026 earnings season. Microsoft and Meta Platforms report Wednesday, the same day the Federal Open Market Committee announces its rate decision, while Apple and Amazon follow Thursday. The Fed is widely expected to hold rates at 3.50% to 3.75% for a fourth consecutive meeting, but Chair Kevin Warsh's press conference will be dissected for any hints about whether September becomes a live meeting for a rate hike amid energy-driven inflation.
The stakes in Big Tech earnings are elevated after Alphabet's report last week, which included solid headline results but ballooning AI capital expenditures that spooked investors and sent the Magnificent Seven ETF down more than 5% on the week. Investors are now watching whether Microsoft, Meta, Amazon, and Apple can demonstrate that AI spending is translating into measurable revenue acceleration, a test analysts say the market will judge harshly if answered ambiguously.
Friday's June Core PCE inflation report — the Fed's preferred gauge — adds a further variable. Economists expect a year-over-year print near 3.4%, and a monthly reading of 0.2% or below is viewed as the threshold needed to reassure markets that the Fed's inflation path is still trending lower despite energy shocks. The Q2 advance GDP estimate, due Thursday, provides an additional data point on whether the US economy remained resilient through the first half of the conflict.
Market strategists cautioned that the durability of Monday's relief rally depends on whether the ceasefire holds through the week and whether the diplomatic pause converts into a formal negotiating framework. Polymarket odds of a peace deal being reached by year-end rose to 61% over the weekend but analysts noted the pause could collapse quickly if either side resumes operations, as has happened repeatedly during the prior 13 weeks of intermittent conflict.