A sharp drop in oil prices prompted by a quieter weekend for geopolitics and a pause in MidEast hostilities also sparked a drop in bond yields and the USD. A powerful relief rally in stocks and bonds emerged after a lull in hostilities in the Middle East, and started a week packed with earnings and a stack of interest-rate decisions on a positive note. As of 8.00am ET, Nasdaq futures surged after the index logged its first back-to-back weekly declines since March; S&P 500 futures rose 1%. After Friday's rout, all Mag 7 stocks gained amid the relief rally in tech and AI-related stocks (Meta Platforms +1.8%, Alphabet +1.7%, Amazon +1.4%, Tesla +1.3%, Microsoft +1%, Nvidia +0.9%, Apple +0.1%). While Asian markets closed mixed, European stocks advanced as broader risk sentiment gets a boost from a pullback in energy prices. Brent crude futures for September fell 9% to around $88 a barrel (these hit $100 late last week) after a lull in hostilities in the Middle East over the weekend. Bond yields fell around the world, with the rate on 10-year Treasuries declining four basis points to 4.64%. The easing came after the US paused a nearly two-week run of strikes against Iran for a third straight night, sending Brent 8.2% lower to $89 a barrel. The dollar fell 0.2%, while gold hit $4,100 an ounce. UK and German 10-year borrowing costs dropped 4-5 bps each. The Bloomberg Dollar Spot Index fell 0.2%; the Swedish krona and Swiss franc are the best performing G-10 currencies, rising 0.4% each. Precious metals advance, with spot silver up around 2%. Today's eco calendar has US Durable goods and the Dallas Fed Mfg Activity (est. 2.0). A slew of earnings, including fresh clues on the pace of AI infrastructure investment, will keep traders on their toes in coming days. On top of that, there’s a Fed interest-rate decision and a reading of its preferred, core PCE inflation index this week. In premarket trading, Magnificent 7 stocks all gained, boosting US stock futures, as a sharp drop in crude prices spurred a relief rally in tech and AI-related stocks (Meta Platforms +1.6%, Alphabet +1.2%, Amazon +1.2%, Tesla +0.8%, Microsoft +1.4%, Nvidia +0.6%, Apple +0.2%)Chipmakers and other AI infrastructure stocks are rallying as traders return to risk, heartened by a pause in US strikes against Iran that’s causing oil prices to slide.D-Wave Quantum (QBTS) climbs 8% after AT&T signed an agreement to expand its use of the company’s quantum computing technology.Ford Motor (F) gains 2% as Jefferies upgrades to buy ahead of second quarter earnings report, saying with US market conditions healthy, management could raise guidance.Forte Biosciences (FBRX) rises 39% after Argenx SE agreed to buy the company for about $2.2 billion in cash to expand its portfolio of immunology medicines.General Motors (GM) rises 1.9% as Jefferies upgrades the stock to buy on confidence that 2027 will further strengthen the automaker’s position “within the US profit oligopoly.”Gossamer Bio (GOSS) climbs 30% on plans to submit a new drug application for seralutinib in pulmonary arterial hypertension in September 2026.MapLight Therapeutics (MPLT) sinks 54% following Phase 2 trial results for a drug aimed at treating adults with acute schizophrenia.Elsewhere in AI, Nvidia is in talks to back OpenAI’s lease of a $500 billion data center, highlighting the circular financing supporting the AI boom. Samsung won a contract worth more than $200 billion to make chips for Broadcom. And memory is back in focus, after CXMT’s blockbuster trading debut in Shanghai and a WSJ report of Micron warning the US against letting Apple buy China chips. In deals news, Jack Daniel’s owner Brown-Forman said its board of directors rejected an unsolicited takeover offer from Sazerac, which asked the company to reconsider the $15 billion bid that was rebuffed earlier this year. Meanwhile, Argenx agreed to buy Forte Biosciences for about $2.2 billion in cash to expand its portfolio of immunology medicines. Traders are finding some respite from weaker oil prices after Brent surged by more than a third this month, stoking concerns that central banks will need to tighten monetary policy to contain inflation. Questions over whether Big Tech firms’ spending spree on artificial intelligence is sustainable have also fueled a prolonged stretch of volatility.Monday’s rally is doing little to ease caution ahead of the busiest week of the earnings season, when a raft of megacaps including Amazon.com Inc., Meta Platforms Inc. and Microsoft Corp. will put AI spending back in the spotlight. Another major event is the Federal Reserve’s rate decision on Wednesday, with markets still pricing around a one-in-three chance of an interest rate hike.“I expect a volatile week with the Fed, tech results, and a bunch of European inflation data coming out,” said Andrea Gabellone at KBC Securities. “Moreover, the Iran situation is still very fragile. For now, the President said that ‘all options are still open,’ so it will be difficult to put risk back on the table.”US equity investors are likely to rotate into high-quality stocks as the focus returns to free cash flow generation and margin expansion, according to Morgan Stanley strategists. Meanwhile, Deutsche Bank’s Parag Thatte notes positioning has fallen sharply in large-cap tech from extended levels to near neutral, with rotation out of the sector about three-quarters of the way through. A busy week of data releases includes June durable goods today, consumer confidence Tuesday and the Fed’s preferred inflation gauge of core PCE for June on Thursday. Sandwiched in between is the FOMC rate decision, when a hawkish hold is expected. Dissent may come from some officials - possibly Dallas Fed President Lorie Logan and Cleveland’s Beth Hammack - who favor a rate increase now. There’s also been widespread discussion over whether new Chairman Kevin Warsh might surprise investors with a hike. No major US earnings are due ahead of the bell on Monday, but that’s the calm before the storm. More than 170 companies in the S&P 500 are set to report this week. The narrative around AI capex is in sharp focus, with last week’s selloff in Alphabet signaling a market in revolt about spending on the tech. It creates a tough setup for earnings from Microsoft and Meta Platforms due on Wednesday and those from Apple and Amazon on Thursday.Big tech’s appetite for AI investment is also driving a wave of bond sales, having a greater impact on the US corporate debt market than might be obvious. SoftBank’s $40 billion bridge loan for its investment in OpenAI has attracted a new group of 21 lenders in a broader syndication phase.In the latest market structure lunacy, CME Group will launch single-stock futures today, allowing investors to hedge or speculate on more than 50 of the largest US companies. The contracts, offering leverage without the complexity of options, will be cash-settled on the closing price of the stocks they’re tied to.The political uncertainty surrounding November’s US midterm election adds to a near-term argument for owning index volatility, according to Goldman strategists. Record low correlations across stocks continue to suppress index volatility, a trend highlighted over the weekend. Turning to earnings, of the 135 S&P 500 companies to have reported to date, 86% have beaten analysts’ EPS forecasts, while 10% have missed. On sales, 69% of companies have positively surprised, while 15% have missed. Bank of Hawaii and Northwest Bancshares are among those due to report before the market opens. Earnings from Welltower and Cadence Design come later in the day.European stocks also rose as tensions ease in the Middle East, broadly shrugging off comments from a European Central Bank rate-setter, who said the institution will have to raise interest rates at least one more time to curtail inflation risks. Energy is the worst performing sector as oil prices slid while tech and retail outperformed. Stoxx 600 rises 0.8% to 649.47. Here are some of the biggest movers on Monday: AstraZeneca shares rise as much as 2% after the drugmaker reported better-than-expected core earnings per share for the second quarter.Evolution shares rise as much as 4.4% in Stockholm, the most in a week, after Candle Lake crossed the threshold for a mandatory offer for the Swedish gaming company.Vodafone shares are up as much as 4.3% after the telecom operator reported growth in organic service revenue in Germany, a positive surprise to analysts that have forecast almost no growth in the company’s biggest market.SES, Eutelsat rally on Monday after both companies said they are expecting to receive payments from the release of C-band spectrum in the US.Interroll jumped as much as 7.5% after Oddo Bhf raised its rating, arguing that a drop in the shares of the Swiss maker of automation equipment and storage solutions had made them “too cheap to be ignored.”Pharos Energy shares soar as much as 31% after the firm agreed to a takeover by fellow London-listed Serica Energy, with shares almost reaching the total offer price.Kinepolis shares rise as much as 6.2% after Degroof Petercam set a Street-high price target for the Belgian cinema chain and reiterated its buy rating ahead of 1H results due on Aug. 20.Irish Continental Group surged as much as 30% after agreeing to a management buyout, with the stock hitting a new all-time high and briefly surpassing the offer price.Inditex shares climb 3.3% after Barclays raises its recommendation on the Zara parent to overweight from equal-weight, saying recent muted shareholder return performance presents an opportunity with the Spanish retailer’s valuation at reasonable levels.Zabka shares fell as much as 14%, the most on record, after Seven & i abandoned plans to buy an equity stake in the Polish convenience-store operator.Havas shares fall as much as 3.8% after JPMorgan analysts say the stock had outrun its growth potential and reduce their rating to neutral from overweight.Cranswick shares erase early gains to fall as much as 2.2% after the British meat producer reported a slowing in its like-for-like revenue growth rate.IP Group shares fall as much as 3.3% after Railpen said it does not intend to make an offer for the science investor in a statement.Vesuvius shares plunge as much as 12% as analysts warned of potential cuts to consensus estimates after the materials technology company adjusted its guidance lower due to ongoing operational issues.Earlier in the session, Asian stocks gained after Friday’s selloff, boosted by a slump in global oil prices and gains in Chinese internet companies as investors brace for an event-heavy week. The MSCI Asia Pacific Index rose 1%, with SK Hynix, Samsung and Tencent the biggest contributors. Chinese equities gained, with sentiment getting a lift as memory chipmaker CXMT debuted with a 466% jump. Stocks also rose in Australia and India, helped by a more than 7% drop in oil prices. Traders are closely watching as an event-packed week gets underway. The US Federal Reserve is set to review monetary policy, while mega-cap technology giants like Meta and Microsoft are scheduled to report earnings. Investors will be paying particular attention to hyperscalers’ spending plans for signs of continued AI investment. Indonesian stocks fell as much as 0.8% before paring losses after the country’s central bank head Perry Warjiyo resigned citing personal reasons.“For Asia more broadly, a falling oil price is very beneficial,” said Leonid Mironov, portfolio manager at Gavekal Capital Ltd. “There are outstanding issues with the yen weakness, but the core drivers of performance this year — chip and AI names — are more levered to global AI capex rather than domestic issues.”Looking at today's calendar, the provisional June reading of durable goods due at 8:30 a.m. ET, followed by Dallas Fed manufacturing activity for July at 10:30 a.m. The Fed’s external communications blackout continues. Market SnapshotTop Overnight NewsIran will halt its own attacks as long as the United States does the same, a senior Iranian official told Reuters on Sunday. The development comes as the United States pressed ‌pause on its bombing campaign after President Donald Trump's advisers told him they were running out of targets and expressed worries about depleting the U.S. arsenal. RTRSA US appeals court refused the DOJ’s request to let federal officials move ahead with Trump’s mail-voting overhaul ahead of the November midterm elections. BBGDeepSeek is said to have told prospective investors it’s pausing a fundraising round, after comments widely attributed to its founder about US-China AI competition went viral. BBGCXMT jumped 466% in its Shanghai debut after the chipmaker raised $9.8 billion in its IPO, turning it into China’s largest onshore-listed company. BBGThe ECB will have to raise interest rates at least one more time to ensure that inflation risks don’t spin out of control, Governing Council member Peter Kazimir said. BBGThe Agriculture Department is lifting a more than yearlong ban on Mexican cattle imports, a move that could ease soaring beef prices. The U.S. plans to resume importing Mexican cattle at the port of entry in Douglas, Ariz., in 30 days and eventually open two additional ports of entry in New Mexico.Big Companies Are Starting to Hire Again, Defying Predictions of AI Wipeout. After a year of holding back on new hires, companies from tech and transportation to defense now say they need more people to work alongside AI. WSJEmployers fear labor shortage as many immigrants lose protected status. A recent Supreme Court ruling cleared the way for the Trump administration to end a humanitarian program that has allowed about 1 million immigrants to work illegally in the US. NYTNvidia is in talks to provide a guarantee of as much as $250 billion to help OpenAI lease computing from a data center project in Ohio, people familiar said. BBGMirroring the pre-election patterns in uncertainty, volatility, and investor flows, US equities have typically traded sideways in the few months ahead of midterms. US equity returns are generally modest during this part of the calendar year but have been weaker on average in midterm election years. During midterm election years of the past few decades, the S&P 500 has generated a median return of 0% from the start of August through Election Day. Returns have typically improved as uncertainty subsided post-election, with the S&P 500 returning a median of 6% in the subsequent 3 months. Goldman ResearchSources say Bipartisan Senate talks over funding federal agencies past the 30th September deadline are trending in the right direction: PunchbowlA more detailed look at global markets courtesy of NewsquawkAPAC stocks were mostly positive, with risk sentiment underpinned as oil prices and yields declined following a halt in US-Iran strikes over the weekend, although some of the gains are capped, with price action somewhat choppy during the session as participants also await several major central bank meetings and key earnings later in the week. ASX 200 was led higher by strength in tech, materials and miners, while energy and defensives lag.