Global Markets Rally as Oil Slumps and Dollar Weakens Amid Improved Risk Sentiment

Global equity markets advanced Thursday, led by a strong performance in U.S. stocks, as the S&P 500 closed at 5,208.33, marking a 1.4% gain. The rally was fueled by declining crude oil prices, with Brent futures dropping 3.2% to $78.15 per barrel and WTI settling at $74.80, their lowest levels since late January. The sustained retreat in energy prices reduced inflation concerns and boosted investor confidence in cyclical sectors. The U.S. dollar index dipped to 104.12, its lowest since February 14, as the USD/JPY exchange rate fell to 152.35, reflecting a shift toward risk-on sentiment. A weaker dollar typically benefits multinational corporations and commodity-importing economies, supporting gains across consumer discretionary and materials sectors. The VIX volatility index dropped 8.7% to 14.65, signaling reduced market fear and a broader reassessment of macro risks. The market’s positive momentum followed a series of economic indicators showing moderating inflation, including a 0.3% month-over-month increase in the U.S. core CPI, below the 0.4% forecast. This data, combined with Federal Reserve officials signaling a pause in rate hikes, helped fuel expectations of a dovish monetary policy path. As a result, Treasury yields declined, with the 10-year yield falling to 4.22%. Markets across Asia and Europe mirrored the gains, with Japan’s Nikkei closing up 1.6% and Germany’s DAX rising 1.2%. The rally underscored a global shift in sentiment, driven by easing energy costs and improved macroeconomic clarity. Investors are now pricing in a slower pace of rate hikes in 2026, which is boosting valuations across risk assets.