The conflict in the Middle East continued to dominate investor sentiment at the start of the week, limiting risk-taking across global markets. Expectations for a significant diplomatic breakthrough faded after no clear outcome emerged from recent high-level discussions, while reports of renewed clashes and intensified military activity in Lebanon reinforced uncertainty. The lack of progress pushed crude oil prices 3–4% higher, reversing part of last week’s decline. Currency markets were comparatively stable, with the US dollar consolidating within recent ranges. Most emerging-market currencies opened the week on a softer footing, although the Mexican peso remained relatively resilient. Investors also monitored political developments in Colombia and policy signals from China, both of which were generally viewed as supportive for financial markets.

Asia Pacific Markets

Asia-Pacific markets delivered a mixed performance after a strong month for regional equities. Chinese stocks mostly declined, although Hong Kong-listed shares outperformed, while South Korean and Taiwanese markets extended their recent rally. Attention remained focused on the Chinese yuan, which continued its advance and reached fresh multi-year highs after gaining more than 3% this year. In Japan, economic data confirmed stronger-than-expected growth during the first quarter, though market participants still anticipate slower expansion in the months ahead. Australia’s manufacturing sector remained in growth territory, and inflation indicators edged higher, encouraging expectations that policymakers may still consider another interest-rate increase later this year. Regional investors also kept a close watch on central bank actions and currency developments as volatility in global markets persisted.

European Markets

European markets started the week cautiously despite a series of encouraging economic indicators. The euro remained confined to a relatively narrow range after reaching its strongest level in more than two weeks before the weekend. Updated data confirmed that eurozone manufacturing activity softened slightly from April but remained in expansion territory, while unemployment held steady. Credit growth provided a more constructive signal, as lending to both households and businesses continued to improve. In the United Kingdom, manufacturing activity strengthened further, highlighting a significant recovery compared with conditions seen a year ago. Nevertheless, European equities retreated modestly after posting solid gains during May, reflecting lingering concerns about geopolitical risks, energy prices, and the broader global growth outlook.

American Markets

In North America, investors balanced geopolitical concerns with a steady stream of economic data and market developments. US equity futures pointed higher after a strong May performance, during which major stock indices recorded substantial gains. Bond markets shifted direction as Treasury yields rose following an extended period of declines, while attention turned to manufacturing indicators expected to show the strongest activity levels in nearly four years. In Canada, markets assessed fresh manufacturing data after the economy experienced two consecutive quarters of contraction. Mexico continued to face challenges in maintaining economic momentum, although remittance inflows remained an important source of support. Meanwhile, the rebound in oil prices added another key variable for investors as they evaluated inflation risks, growth prospects, and the potential impact of ongoing geopolitical tensions.