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Markets remain cautious as Middle East tensions cloud outlook

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Markets remain cautious as Middle East tensions cloud outlook

Global markets continue to trade cautiously as uncertainty surrounding developments in the Middle East keeps investors on edge. Oil prices remain volatile amid shifting expectations around a potential US-Iran agreement and the reopening of the Strait of Hormuz, while the US dollar has struggled to establish a clear direction. Notes that optimism around diplomatic progress has supported broader market sentiment at times, though traders remain wary after several earlier negotiations failed to deliver concrete outcomes. Elevated energy prices and geopolitical uncertainty continue to reinforce inflation concerns globally, limiting expectations for aggressive central bank easing in the near term.
In currency markets, USD/JPY remains trapped within a narrow range as traders weigh hopes of easing geopolitical tensions against expectations that the Federal Reserve may maintain a hawkish policy stance for longer. Meanwhile, Australia’s leading economic indicators continue to point toward slower domestic growth ahead, with higher inflation and softer labour market conditions expected to weigh on activity through the second half of the year. Notes that persistent energy price pressures and cautious consumer sentiment could further dampen spending momentum, even as financial markets continue reacting sharply to geopolitical headlines and shifting central bank expectations.

General Market

Wall Street

  • Dow Jones: -0.31% to 49,499
  • S&P 500: +0.29% to 7,230
  • Nasdaq: +0.94% to 27,710
Asia-Pacific
  • ASX 200: -0.57% to 8,682
  • Nikkei: 0.61% to 59,625
  • Shanghai Composite: +0.11% to 4,117
Europe
  • FTSE: -0.1% to 10,362
  • DAX: +1.41% to 24,292
  • CAC: +1.14% to 8,128

Headlines to Watch

United States

  • NFP + unemployment → core driver of Fed path
  • Services PMI → inflation persistence risk
  • Fed leadership + policy divergence increasingly in focus

Europe

  • CPI + GDP → stagflation vs recovery narrative
  • Earnings resilience vs macro slowdown risk
  • ECB reaction function tied heavily to inflation prints

Asia-Pacific

  • Japan CPI + FX intervention risk (yen volatility elevated)
  • Australia RBA decision → tightening bias still live
  • NZ labor data → confirms/disrupts RBNZ stance

Global / Geopolitics

  • Oil > $120 risk → inflation shock channel
  • Middle East conflict → supply disruption (Strait of Hormuz)
  • Currency volatility (JPY intervention, USD strength)
  • “Sell in May” seasonal sentiment + positioning risk
Currency Pair Mid-market Rate
AUD/USD 0.7203
AUD/NZD 1.2208
AUD/JPY 113.12
AUD/CNY 4.9210
AUD/EUR 0.6144
AUD/GBP 0.5304
AUD/HKD 5.6421

 

 

 

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