Global markets continue to trade in cautious and mixed conditions as investors balance geopolitical risks, persistent inflation concerns and slowing global growth expectations. The ongoing tensions involving the United States and Iran remain a major focus, particularly due to the strategic importance of the Strait of Hormuz, a critical energy corridor responsible for roughly one-fifth of global oil shipments.
Fundamental Overview
Macro conditions remain complex as markets navigate several competing forces. US Treasury yields continue to hold elevated levels, particularly across shorter maturities, reflecting expectations that interest rates may remain restrictive for longer as policymakers continue to combat inflation. This yield environment has helped maintain support for the US dollar while placing pressure on risk assets.
The economic calendar today features several key releases that could influence short-term market volatility. Investors will be closely watching Chinese industrial production and retail sales data for signals on global demand, alongside Canadian inflation figures and US economic releases, including industrial production and capacity utilisation. These indicators may provide further insight into the balance between inflation persistence and the risk of slowing growth.
Risk Sentiment
Overall sentiment across global markets remains tilted toward risk-off conditions. Investors continue to favour defensive assets as uncertainty around growth and geopolitics persists. The US dollar remains supported by higher yields and safe-haven demand, while equity markets show signs of hesitation amid concerns that tighter financial conditions could weigh on economic activity.
Oil prices remain elevated as geopolitical developments keep supply risks firmly in focus, particularly with uncertainty surrounding shipping activity through the Strait of Hormuz.
Technical Perspective
Technically, major equity indices remain under pressure. Both the S&P 500 and Nasdaq Composite continue to display bearish structures after rejecting key resistance levels.
In foreign exchange markets, EUR/USD and GBP/USD remain in established downtrends reflecting ongoing USD strength. Meanwhile, gold is holding near key support zones after losing upside momentum, suggesting markets remain cautious as macro risks persist.
Focus for Today
The key focus would be to look for opportunities to sell the Indices as downside momentum persists. The USD to continue its strength amid risk-off capital flows. Lastly, we remain bullish on Oil prices as the US pressure other countries to assist with the reopening of the Strait of Hormuz.