Fri. May 17th, 2024

Global stock markets saw a rebound on Monday as Middle East tensions showed signs of easing and investors turned their focus toward key US inflation data and upcoming corporate earnings reports. The rebound came after last week’s losses triggered by heightened geopolitical concerns and a negative lead from Wall Street.

Asian markets were among the top performers, with Hong Kong leading the charge with a 1.8 percent gain. The upturn was attributed to a perceived reduction in Middle East risks following Iran’s measured response to a reported Israeli attack, as well as expectations for key US inflation data that could influence the Federal Reserve’s policy decisions.

The recent skirmish between Israel and Iran had initially sparked fears of a broader conflict, but with no major escalations over the weekend, investors seized the opportunity to re-enter the markets. This cooling of tensions also led to a decline in oil prices, providing further relief to the broader market sentiment.

Despite the rebound in Asian markets, Wall Street had a rocky week, with the Nasdaq falling over two percent due to heavy selling in major technology companies like Amazon, Apple, and Netflix. The mixed signals from the US markets underscored the uncertainty surrounding the upcoming release of the Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred measure of inflation.

The PCE index, due to be released on Friday, will play a pivotal role in shaping the Federal Reserve’s approach to interest rates. It follows three consecutive months of higher-than-expected consumer price index (CPI) figures, which have dampened hopes for a rate cut in the near term. The Fed’s policy announcement next week will be closely watched for clues on its future actions.

In Europe, the markets also showed signs of recovery, with London, Paris, and Frankfurt all opening higher. Despite a positive overall tone, some markets, including Shanghai, Jakarta, and Taipei, recorded small losses. The week ahead is expected to be busy for corporate earnings, with major companies like Google parent Alphabet, Tesla, and Microsoft set to release their reports. Investors will be watching for robust results to support the recent uptick in equities.

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