Global markets started the week with a cautiously constructive tone as geopolitical tensions in the Middle East showed signs of stabilisation, helping risk assets recover some ground after recent volatility. While headlines remain fluid, the absence of further escalation supported a mild risk-on shift across equities.
In the US, futures pointed higher with the S&P 500 up around 0.4% and the Nasdaq 100 outperforming with a 0.6% gain, driven primarily by continued strength in large-cap technology and semiconductor names. The AI trade remains a key anchor for sentiment, with investors now turning their focus to upcoming earnings from AMD as a test of whether capital expenditure momentum in the sector remains sustainable.
Energy markets eased slightly, with Brent crude slipping around 1.3% back below the recent highs near $115. The pullback reflects easing short-term supply fears after ceasefire signals, though the broader risk premium remains in place given ongoing uncertainty around the Strait of Hormuz and regional escalation risk.
Corporate earnings continue to play a central role in price action. PayPal delivered a stronger-than-expected quarter, beating on both revenue and EPS, supported by solid Venmo transaction growth. Pfizer also surprised to the upside, with strength in key franchises like Eliquis and Prevnar offsetting softer-than-expected vaccine revenues. The overall takeaway remains consistent: markets are rewarding execution, while forward guidance continues to dictate follow-through.
In Europe, equities moved higher with the Stoxx 600 up 0.5%. Consumer cyclicals were a key outperformer, led by a sharp rally in Anheuser-Busch on stronger-than-expected demand trends. However, financials remained under pressure, with HSBC falling over 5% after disappointing earnings, reinforcing the ongoing divergence between sectors within the index.
Currency markets were relatively stable, with the US dollar holding steady after recent safe-haven flows linked to Middle East tensions. In fixed income, UK yields caught up following a public holiday, adding some volatility to European bond markets, while global rates remain sensitive to both inflation expectations and fiscal supply concerns.
Geopolitically, tensions remain elevated despite temporary stabilisation efforts. Continued exchanges between the US, Iran, and regional actors keep energy infrastructure and shipping routes in focus, particularly around the Strait of Hormuz. At the same time, diplomatic activity in the region, including Iranian engagement with China and statements from Gulf officials, suggests ongoing behind-the-scenes positioning.
Elsewhere, commodities and safe-haven flows showed mixed behaviour. Gold remains elevated after recent volatility, reflecting continued demand for hedges against geopolitical and inflation risk, while oil continues to trade as the primary barometer for regional risk sentiment.
Overall, global equities remain near record levels, but market breadth is still narrow. Leadership is concentrated in mega-cap technology and earnings-driven names, while broader participation remains limited. The key theme remains clear: markets are being driven less by macro conviction and more by selective positioning around earnings, energy dynamics, and geopolitical headlines.
By Amir Amidian
Senior Market Analyst | Zylostar
