Global financial markets exhibited a complex sentiment on Monday evening. As Israel and Iran reached a consensus on a temporary ceasefire, geopolitical risk premiums began to fade, yet US stock index futures still posted a slight decline. Shortly after 8 PM Eastern Time, all three major index futures recorded drops of approximately 0.1%, with S&P 500, Nasdaq 100, and Dow Jones futures trading near 7,410.50, 29,423.25, and 50,791.0 points, respectively. Although the semiconductor sector experienced a sharp sell-off last week, chip manufacturing stocks were the first to stabilize and rebound this week, emerging as a key force supporting the market.
Regarding the Middle East situation, both sides agreed to suspend mutual attacks under the mediation of President Trump. However, Tehran issued a warning that if Israel continues military actions against Hezbollah in Lebanon, retaliatory strikes could resume. This dynamic sustains the blockade status of the Strait of Hormuz, driving up international oil prices and intensifying market concerns about reignited inflation. WTI crude oil futures settled at $91.30 per barrel on Monday, while Brent contracts closed at $94.25 per barrel, having fluctuated significantly during the session due to safe-haven sentiment.
Wall Street's overall performance showed distinct structural divergence. Following a plunge of over 10% in the Philadelphia Semiconductor Index last week, technology stocks saw a corrective rally on Monday. Micron Technology closed up more than 9%, and Intel surged by over 11%. Rumors circulated that Google had placed orders for millions of Tensor Processing Units with the latter, injecting confidence into the market. However, most sectors other than semiconductors remained relatively flat, constrained by doubts over the economic impact of the war. The Dow Jones Industrial Average even dipped slightly, reflecting a wait-and-see attitude among investors facing uncertainty.
The core anxiety in the current market remains centered on inflation data. After a robust non-farm payroll report last Friday, investors worried that interest rates would remain higher for longer. The May Consumer Price Index (CPI), scheduled for release this Wednesday, will serve as a critical barometer. Several institutions predict that driven by soaring energy prices, particularly gasoline costs, and shipping disruptions, the year-over-year increase in the May overall CPI could climb to the range of 4.2% to 4.3%, marking a new high since April 2023. This potential acceleration in inflation could strengthen expectations that the Federal Reserve will maintain a hawkish stance, thereby continuing to suppress the overall upside potential of the stock market.
