A look at today’s outlook for European and global markets by Tom Westbrook
Traders open the new quarter on their first buying session, as settlements typically occur one day after trades.
The record oil supply shock that marked the previous quarter has failed to roil financial markets, with demand cuts in China, alternative shipping routes and producers filling the crude gap.
Oil prices have retreated to pre‑conflict levels, before the US‑Israeli‑Iran tensions escalated at the end of February, and recent skirmishes pose little market impact.
Bond markets continue to shrug off geopolitical noise, as investors maintain expectations for modest US rate hikes driven by robust growth rather than inflationary pressures.
Bonds largely ignored the Supreme Court’s denial—anticipated in January—of President Donald Trump’s attempt to dismiss Fed Governor Lisa Cook.
The AI boom has persisted unabated, lifting South Korea’s KOSPI by roughly 100% in the first half of the year and driving a record 36% quarterly gain for Japan’s Nikkei.
Capital flows have been paradoxical: foreign outflows from South Korea have weakened the won as investors lock in profits and rebalance portfolios, while retail buyers chase the rally.
Recent market volatility may shift attention toward a wider array of uptrending but less overheated equities in Europe—where the STOXX index is up about 9% this quarter—and in Asia, where mainland Chinese blue chips have climbed 10%.
Both the yen and the won are under pressure as markets view Japan as lagging the global rise in interest rates; the yen breached ¥162 to the dollar for the first time since 1986 in Asian trading, and traders say the risk of intervention rises as the rate approaches ¥165.
German, French and Italian inflation data due this week could show declining annual rates, suggesting European policy rates may remain on hold for a prolonged period.
ECB policymaker Isabel Schnabel will speak on a panel in Sintra, while Fed Chair Kevin Warsh is scheduled to appear on Wednesday.
Key market‑moving items for Tuesday include:
Economic releases: European inflation, UK GDP, US job openings and consumer confidence.
Events: Sintra Forum.
(Editing by Jacqueline Wong)
