Market Summary

Relief Rally as Middle East Tensions Ease: Global markets rebounded overnight after the US and Iran refrained from further military strikes, boosting risk sentiment across equities while sending oil lower and bonds higher. Brent crude fell as much as 7.4% this morning to below $90 per barrel before recovering some losses and now trades around $92.46. Despite today's pullback, the benchmark remains more than 50% higher year-to-date following months of supply disruptions in the Middle East. Meanwhile, US 10-year Treasury yields declined 4.26 basis points to 4.63% as easing energy prices reduced immediate inflation concerns.

Equities Recover Ahead of Central Bank Decisions: US equity futures point to a strong open following last week's technology-led selloff, with Nasdaq 100 futures rising 1.2% and S&P 500 futures up 0.71%. Investors are looking past recent weakness in semiconductor stocks, although attention remains firmly on whether heavy AI-related capital expenditure by major technology companies will translate into stronger long-term returns. This week's earnings from several technology bellwethers are expected to be a key driver for market sentiment.

Fed Decision in Focus: Markets now turn their attention to Wednesday's Federal Reserve policy decision, with traders pricing a 31.5% probability of an interest rate hike this week and a 96% probability of a hike by September. The recent decline in oil prices has eased some inflation concerns, although policymakers remain cautious following the sharp rise in energy prices over recent months. The Bank of England and Bank of Japan will also announce monetary policy decisions later this week. USD/JPY remains elevated around 163.57, with markets assigning just a 4.1% probability of a Bank of Japan rate hike.

Gold Rebounds but Technical Picture Remains Weak: Spot gold has risen 1.01% this morning to $4,091 per ounce, benefiting from the weaker dollar and lower Treasury yields. Despite the recovery, XAUUSD continues to trade below its key moving averages, suggesting that the broader technical trend remains cautious.

Economic Calendar

• German IFO Business Climate
• Eurozone M3 Money Supply
• US Durable Goods Orders
• Mexico Trade Balance

Key Market Moves Today

• S&P 500 Futures: +0.71% (7,500.5)
• U.S. 10-Year Yield: -4.26bps (4.63%)
• Brent Crude: -4.46% ($92.46)
• Bitcoin: +0.96% ($65,216)
• Spot Gold: +0.90% ($4,089.1)

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