A look at the day ahead in European and global markets

By Wayne Cole, Chief Correspondent, Treasury

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A fragile truce seems to have settled on the Gulf as the U.S. military ceased its attacks, in part because of concerns it was running out of ammunition, and Iran said it would pause ‌for as long as the U.S. held off.

The Houthis complicated things by attacking oil facilities in Saudi Arabia, but investors have chosen to take it all as a step toward de-escalation and knocked Brent down around 4% to $92.80. It does look like the $100 mark is where the U.S. blinks, suggesting oil needs to stay near enough to that to keep the two sides talking.

REUTERS/Kacper Pempel/Illustration

Equities have managed a muted ⁠cheer with Nasdaq futures up 1% but Asian stocks easing in case a raft of tech earnings this week stokes worries about the mountain of capex going to AI.

The sums involved were underlined by a Wall Street Journal report that Nvidia was in talks to provide a roughly $250 billion backstop for OpenAI as part of a data centre project.

Companies reporting this week include tech darlings Microsoft, Meta Platforms, Amazon, Apple and Qualcomm, along with a host of industrial, defence and healthcare stocks.

About one-third of S&P 500 companies are due to report this week and earnings are on track to boast a 26.5% increase on last year, though even ‌that ⁠may not be enough to satisfy sky-high expectations.

In a hopeful sign, Chinese chipmaker CXMT Corp's shares surged 500% in their Shanghai trading debut after the company raised $8.6 billion in Asia's biggest initial public offering this year.

Graphics are produced by Reuters

The retreat in oil helped bonds rally after a tough run last week, while Fed funds futures have taken 2 to 3 basis points of ⁠tightening out of the curve.

The market still has a one-in-three chance of the Federal Reserve hiking this week. The vast majority of analysts assume Chair Kevin Warsh is not for tightening, but there could easily be one or two dissents in ⁠favour of an immediate hike.

The Bank of England holds its meeting on Thursday and the Bank of Japan on Friday, and both are expected to hold steady while remaining cautious about inflation risks ahead.

The balance of risks ⁠was illustrated by Singapore's central bank, which surprised on Monday with a tightening of its own by allowing a slightly faster appreciation in its currency.