Market Sways: Oil Dip Eases Tensions Ahead of U.S. Elections

Equities in developing markets rose as crude oil prices fell amid easing geopolitical tensions. Oil futures decreased over 5% following Israel's restrained response to Iran, reducing fears of a wider conflict. Global markets remain cautious ahead of the U.S. presidential election.

Equities in many developing markets saw gains on Monday, buoyed by a drop in crude oil prices amid a temporary easing of geopolitical tensions in the Middle East. The decline in crude futures by over 5% followed Israel's moderated response to a missile attack from Iran, which notably avoided targeting oil and nuclear facilities, easing concerns of potential disruptions to energy supplies — a lifeline for developing economies.

Elias Haddad, a senior markets strategist at Brown Brothers Harriman, highlighted the ongoing concerns surrounding the geopolitical risks despite the diminished threat of a major conflict between Iran and Israel. Meanwhile, MSCI's index tracking emerging markets marked a slight rise of 0.2%, recovering from three weeks of losses, as investors prepared for potential implications of the upcoming U.S. presidential election on global economies.

Currency markets saw varied performances, with net oil importer currencies like those of the Philippines and South Africa gaining slightly, while oil exporter Nigeria's naira depreciated. In a related development, reports suggested negotiations between Israeli and Hamas leaders were underway in Doha. Meanwhile, Indian and South Korean stocks showed positive movement, adding to the mixed market sentiments globally.

(With inputs from agencies.)