The week kicked off on a positive note for APAC markets, buoyed by last Friday’s strong performance on Wall Street. With little in the way of macroeconomic news over the weekend, most Asian markets saw gains. Notably, Japanese markets were closed in observance of Mountain Day, resulting in quieter trading volumes in the region.

European markets are also gearing up for a stronger start. Futures for the Euro Stoxx 50 index are up 0.5%, signaling a potential continuation of Friday’s modest gains, when the index closed 0.1% higher. Investors appear cautiously optimistic, building on the positive momentum from the previous week.

In the bond market, 10-year U.S. Treasury futures were directionless, reflecting the lack of catalysts and the closure of overnight cash Treasuries due to Tokyo’s market holiday. This lull in activity may see traders waiting for more significant data releases before making decisive moves.

On the monetary policy front, the Bank of England’s policymaker Catherine Mann expressed ongoing concerns about inflation in the UK, particularly due to wage growth. Mann noted that prices for goods and services are likely to rise again, a worrying sign for the central bank’s inflation targets. Interestingly, she mentioned that her stance has softened slightly, moving from a ten to a seven on her personal “hawkishness” scale.

In geopolitical news, tensions in the Middle East are escalating. Israeli Defence Minister Yoav Gallant warned that Iran’s recent military preparations indicate the potential for a large-scale attack, which could precede the ceasefire talks scheduled for Thursday. This development adds a layer of uncertainty to the global outlook, particularly in the energy markets.

Looking ahead, market participants will be keeping an eye on the upcoming release of the U.S. New York Federal Reserve’s Survey of Consumer Expectations (SCE). This data will be closely watched for insights into consumer sentiment and inflation expectations, which could influence future market movements.

As the week progresses, investors will remain vigilant, balancing optimism with caution amid ongoing economic and geopolitical developments.