While the situation remains tense, the lack of escalation over the weekend provided traders with an opportunity to pick up equities and helped push oil down
Asian markets rose Monday, clawing back some of last week’s losses, as Middle East concerns faded and traders looked ahead to the release of key US inflation data and corporate earnings.
With Iran downplaying a reported Israeli attack on the country, which came days after a strike on Israel by Iran, tensions between the two countries appeared to have cooled.
While the situation remains tense, the lack of escalation over the weekend provided traders with an opportunity to pick up equities and helped push oil down.
The gains came despite a largely negative lead from Wall Street, where the Nasdaq dropped more than 2% due to hefty selling in tech giants including Amazon, Apple and Netflix.
Investors are now setting their sights on the PCE index, the Fed’s preferred gauge of inflation, which is due on Friday.
The figure could play a major role in the central bank’s decision-making on interest rates, and comes after a third consecutive month of above-forecast CPI figures.
The disappointing CPI data has dented hopes for a rate cut in June, and traders have pared back their outlook for how many cuts the Fed will make this year.
The PCE report is followed by the bank’s policy announcement next week, which will be pored over for clues about its next step.
Several officials have lined up to temper expectations for cuts, citing sticky inflation as well as a still-strong economy and labour market.
Chicago Fed boss Austan Goolsbee said last week that the fight against soaring prices had stalled.
Right now, it makes sense to wait and get more clarity before moving, he said, warning that bringing inflation back to the bank’s 2% goal would likely take longer than initially thought.
