BY COMORT OGBONNA
Global markets began the week cautiously on Monday as investors balanced concerns over ongoing tensions in the Middle East with optimism surrounding corporate earnings and upcoming economic data releases. Shares across Asia moved slightly higher while oil prices remained relatively stable, reflecting uncertainty over the geopolitical situation and its potential impact on global markets.
Investor sentiment improved somewhat after signs emerged of limited diplomatic progress involving the United States and Iran, though traders remained careful about making major moves until clearer developments unfold. Financial markets are also preparing for a busy week that includes major corporate earnings reports and important economic indicators, particularly from the United States.
One of the biggest market moves during Asian trading came from the Japanese yen, which strengthened sharply against the U.S. dollar. The dollar fell as much as 0.9% to 155.7 yen before recovering part of its losses later in the session. Currency traders remain highly alert following Japan’s intervention in the foreign exchange market last week aimed at supporting the weakening yen.
The sudden movement in the currency market came amid thin trading conditions due to a public holiday in Japan, which reduced market liquidity and amplified volatility. Analysts suggested that the sharp fluctuations were likely driven more by reduced trading volumes than by another direct intervention from Japanese authorities.
President Donald Trump said the United States would begin efforts on Monday to help ships stranded near the Strait of Hormuz, one of the world’s most important oil shipping routes. However, he provided few details about the operation, leaving investors uncertain about how effective the plan might be in restoring normal trade flows.
The U.S. Central Command later announced that support efforts would involve guided-missile destroyers, more than 100 aircraft operating from land and sea, and approximately 15,000 military personnel. Despite the military presence, reports indicated that the U.S. Navy might not directly escort commercial ships through the strait, adding to concerns about continued risks for shipping companies.
Iran stated earlier that the United States had responded to its 14-point diplomatic proposal through Pakistan and that Tehran was reviewing the response. However, Trump suggested that the proposal was unlikely to meet U.S. expectations, signaling that a breakthrough agreement may still be distant.
Oil markets reacted cautiously to the mixed signals. Brent crude futures rose just 0.2% to $108.36 per barrel after initially falling more than 2% earlier in trading. U.S. crude oil slipped slightly by 0.1% to $101.85 per barrel. Traders remained focused on the possibility of further disruptions to energy supplies passing through the Strait of Hormuz.
Shipping concerns intensified after reports that a bulk cargo vessel was attacked by several small boats near Sirik, Iran, on Sunday. The incident highlighted ongoing security risks in the region and raised doubts about how many commercial vessels would be willing to travel through the strait even with increased military support.
Asian stock markets generally moved higher despite the uncertainty. MSCI’s broad Asia-Pacific index outside Japan gained 3%, supported by a strong rally in South Korean technology stocks. South Korea’s main stock index surged 4.6% after returning from a holiday break, while Hong Kong’s Hang Seng Index climbed 1.7%.
European and U.S. futures markets also pointed modestly higher. EUROSTOXX 50 futures and Germany’s DAX futures each rose 0.3%, while S&P 500 futures gained 0.1% and Nasdaq futures added 0.3%.
Investors are now turning attention toward a heavy corporate earnings calendar featuring more than 100 companies reporting results this week. Major firms expected to release earnings include Advanced Micro Devices, Super Micro Computer, Palantir, Walt Disney, and McDonald’s.
Analysts at Goldman Sachs said earnings growth for companies in the S&P 500 remained strong despite elevated energy costs and geopolitical uncertainty. According to the bank, earnings-per-share growth is currently running at around 25%, or roughly 16% after adjusting for one-time gains.
The analysts noted that company guidance and analyst revisions have remained surprisingly resilient even as oil prices climbed and global tensions intensified. However, they added that stock market reactions to positive earnings surprises have been relatively muted this quarter.
Investors are also increasingly focused on the enormous spending tied to artificial intelligence infrastructure and technology development. Estimates for global AI-related capital expenditure in 2026 have risen to $751 billion, significantly higher than projections earlier this year and far above expected spending levels for 2025.
At the same time, concerns are growing that rising oil prices could reignite inflation pressures around the world. Higher energy costs have already pushed government bond yields upward, creating additional pressure on stock valuations and prompting central banks to adopt more aggressive policy positions.
Market expectations for interest rate cuts from the U.S. Federal Reserve have dropped sharply. Traders now expect only minimal easing by the end of the year compared with expectations just one week ago. Meanwhile, forecasts for additional tightening from the European Central Bank and the Bank of England have increased.
Australia’s central bank is also expected to raise interest rates again during its meeting on Tuesday as policymakers continue fighting stubborn inflation.
Attention later this week will shift toward major U.S. economic data releases, especially Friday’s monthly jobs report. Economists expect the U.S. economy to have added around 60,000 jobs in April following March’s stronger-than-expected gain of 178,000 jobs. However, analysts warned that seasonal adjustment issues could make the data more volatile and difficult to interpret.
In currency markets, the dollar weakened slightly overall as traders monitored developments in the Middle East and the future of shipping through the Strait of Hormuz. The euro remained steady at $1.1726, while the British pound held near $1.3584 ahead of local elections in the United Kingdom.
Gold prices were little changed at $4,610 an ounce, remaining within recent trading ranges as investors balanced safe-haven demand against shifting expectations for global interest rates and inflation.
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