Global markets continue to navigate a complex environment shaped by three major competing narratives: strong AI-driven growth expectations, ongoing geopolitical tensions surrounding the US–Iran conflict, and the introduction of a new tariff policy from Donald Trump. While equity markets remain supported by optimism surrounding technology and artificial intelligence, rising oil prices and geopolitical uncertainty continue to create inflationary pressures that could complicate the outlook for central banks.
Fundamental Overview
Oil markets remain firmly supported as concerns persist over potential supply disruptions linked to tensions in the Middle East. Communication between Iran, the United States, and regional allies remains inconsistent, keeping geopolitical risk elevated and supporting energy prices. Meanwhile, President Trump’s newly announced 10% tariff policy has so far had only a limited impact on market sentiment. However, investors continue to assess the longer-term implications for inflation, trade flows, and global economic growth.
Economic data remains broadly supportive. US manufacturing activity continues to expand, highlighting resilience within the American economy. In Europe, inflation remains elevated despite a relatively strong labour market, while softer Australian GDP figures reinforce the uneven nature of global growth. Attention now turns to upcoming ADP employment data, Friday’s Non-Farm Payroll report, Federal Reserve communications, and remarks from central bankers, all of which could influence near-term volatility.
Risk Sentiment
Risk sentiment remains mixed but maintains a slight risk-on bias. AI-related investment and technology-led growth continue to underpin equity markets, while higher oil prices and geopolitical risks create concerns about a potential second wave of inflation.
Investors remain selective, favouring quality opportunities while maintaining cautious positioning amid elevated uncertainty.
Technical Overview
Technically, US oil continues to maintain a constructive bullish structure. The US dollar is attempting to build support from higher bond yields, while equity markets remain resilient despite growing macro risks. The Japanese yen remains a key market to monitor as expectations surrounding future Bank of Japan policy and intervention risks continue to influence currency flows.