On the evening of October 6, European stock markets surged while U.S. index futures continued to climb steadily. At the same time, bond markets also advanced, with medium and long-term government bond yields across the globe falling sharply. European bonds, which had previously dropped to multi-decade lows, also rebounded, led by French and Italian government debt, which have been the recent laggards. The euro stabilized on Monday after hitting a 17-month low.
In the crude oil market, prices plunged dramatically, falling more than 2%. The global benchmark Brent crude dropped below $100 per barrel, while U.S. West Texas Intermediate (WTI) retreated to around $88 per barrel. On the news front, Gulf oil-producing nations are shipping more crude through the Strait of Hormuz. Although risks in this waterway remain elevated, an increasing number of tankers are taking the gamble. Kuwait stated that its crude output has now recovered to roughly 75% of pre-Iran war levels, and Iraq is seeking to charter more tankers to transport crude through the Strait of Hormuz. Meanwhile, Saudi Aramco cut the price of its flagship Arab Light crude for Asian buyers to a six-year low in a bid to capture more market share.
On October 6 local time, Saudi Arabian Energy Minister Abdulaziz bin Salman said that the kingdom's East-West pipeline has restored its daily throughput to 5.8 million barrels. In September, the East-West pipeline was temporarily shut down after a drone attack. Additionally, the Saudi-led coalition claimed progress in its ground offensive against Houthi forces in Yemen, having recaptured some areas from the Houthis. Yemen's armed forces said that after clashes with Iran-backed Houthi fighters, they had taken control of the Red Sea coastal city of Mokha on Monday. That night, the Houthis stated that Saudi forces had launched approximately 60 airstrikes on multiple areas in Yemen, including the capital Sanaa. The Houthis said they subsequently retaliated against Saudi Arabia with missiles and drones, targeting Riyadh's main airport.
Some analysts noted that against the backdrop of high oil prices and elevated bond yields continuously weighing on risk appetite, the market has finally seen a relatively broad-based easing rally. Major global stock indices overall remain quite resilient, with substantial growth in artificial intelligence investment and strong corporate earnings continuing to support market demand. Alessandro Garbellone, a fixed-income analyst at Degroof Petercam bank, said: "European rate markets are being boosted by falling oil prices. Given that the conflict has not truly been resolved, oil prices remain a key focal point. Political pressure on France is still rising, but after Le Pen's budget-related remarks, French government bond yields declined today, which may provide some breathing room in the short term."
Marine Le Pen, the far-right National Rally leader and French presidential candidate, proposed cutting France's fiscal deficit to below 3% of GDP by 2032 at the latest. Due to uncertain political prospects and continuously rising debt costs, France has recently come under increasing pressure in the bond market.