Global stock markets gained ground on this week as investors welcomed signs of easing tensions in the Middle East.

News of a preliminary agreement between the United States and Iran boosted market confidence and helped drive oil prices to their lowest levels in nearly three months.

The decline in oil prices has been particularly welcomed by investors because lower energy costs could help reduce inflation pressures around the world.

Analysts believe cheaper oil may ease concerns among central banks that inflation could reaccelerate later in the year.

Major stock indexes across Europe and North America responded positively. Financial companies, industrial firms and transportation stocks were among the biggest beneficiaries, while investors shifted money into sectors expected to benefit from lower fuel costs and improved economic conditions.

However, market participants remain cautious because details of the agreement are still emerging. Investors are closely watching developments involving shipping activity through the Strait of Hormuz, one of the world’s most important energy trade routes.

Market experts say geopolitical developments will remain a major influence on business and financial markets throughout the week.

The combination of falling oil prices and easing tensions has provided a welcome boost to investor sentiment.

Source: Reuters