Global Markets Under Pressure Ahead of U.S. Inflation Data
Global markets traded cautiously on Tuesday as investors prepared for the upcoming U.S. inflation report, with rising geopolitical tensions and renewed pressure on technology stocks driving risk-off sentiment across equities, currencies, and bond markets.
U.S. equity futures moved lower, with Nasdaq 100 futures declining 0.7% after the index posted consecutive record highs led by semiconductor stocks. S&P 500 futures also slipped 0.3% as investors reduced exposure to growth-sensitive technology shares ahead of key inflation data that could influence the Federal Reserve’s next policy decisions.
Technology weakness extended into Europe and Asia. The Stoxx 600 fell 0.6%, while South Korean markets came under significant pressure after policymakers proposed the possibility of taxing AI-related profits to fund dividends for citizens. The Kospi index dropped 3.1%, weighing heavily on broader Asian sentiment.
In the United Kingdom, financial markets remained volatile as political uncertainty intensified around Prime Minister Keir Starmer. UK government bonds faced heavy selling pressure, pushing 30-year gilt yields to 5.79%, their highest level since 1998. Sterling weakened sharply against major currencies, with GBP/USD falling as much as 0.8% against a strengthening U.S. Dollar.
The U.S. Dollar Index continued to climb, heading toward its strongest two-day performance this month as Treasury yields pushed higher ahead of the inflation release and a key 10-year Treasury auction. Investors increasingly positioned for the possibility that a stronger-than-expected CPI print could delay Federal Reserve rate cuts and place further pressure on risk assets, particularly technology stocks and other duration-sensitive sectors.
Meanwhile, oil prices surged again as concerns grew that the fragile U.S.-Iran ceasefire may collapse. Brent crude climbed above $107 per barrel after reports indicated that shipping activity through the Strait of Hormuz remained halted. President Donald Trump reportedly rejected Iran’s latest proposal and suggested the ceasefire may not hold, increasing fears of prolonged disruptions to global energy supplies.
Safe-haven demand continued to support the Dollar while bond yields rose globally. U.S. Treasury Secretary Scott Bessent and Japanese officials both warned against excessive foreign-exchange volatility amid growing market uncertainty.
Geopolitical developments also remained in focus after Kremlin officials suggested the Ukraine war may be approaching its final stages, while Qatar reportedly instructed LNG vessels to operate under stricter security measures due to rising regional risks.
On the economic front, Germany’s final HICP inflation reading remained unchanged at 2.9%, meeting expectations and reinforcing the view that inflation pressures in Europe are stabilizing. Market attention now turns fully toward the U.S. inflation figures, which could determine the near-term direction for global equities, currencies, and bond markets.
In corporate and technology news, President Trump is expected to travel to Beijing later this week for a high-stakes meeting with Chinese President Xi Jinping, with trade negotiations and Middle East tensions expected to dominate discussions. Reports also indicated that major CEOs including Elon Musk, Tim Cook, and Larry Fink may join the trip.
Elsewhere, OpenAI reportedly revised its agreement with Microsoft, capping revenue-sharing payments at $38 billion through 2030. Additionally, Apple announced support for encrypted RCS messaging for iOS 16.5 users, while U.S. lawmakers introduced new legislation targeting Chinese vehicle imports.
As markets await the critical U.S. CPI release, investors remain highly sensitive to inflation surprises, geopolitical risks, and interest-rate expectations, all of which continue to drive heightened volatility across global financial markets.
By Amir Amidian
Senior Market Analyst | Zylostar
