Global markets kicked off the session with mixed sentiment, but concerns over geopolitical developments have led to a deterioration in risk appetite. While European bourses and US futures initially showed a lack of clear direction, the mood has since shifted to the downside. However, luxury stocks remain a bright spot, buoyed by Hermès’ strong earnings, which have lifted the broader sector.

Currencies: USD Under Pressure as Antipodeans Lead

The US dollar remains under pressure following former President Donald Trump’s announcement of potential new tariffs. This has provided a tailwind for Antipodean currencies, which are leading the FX space. Market participants continue to assess the implications of trade policy shifts and their potential impact on global markets.

Bonds: Bearish Bias Persists Amid Geopolitical Concerns

While bonds continue to exhibit a bearish bias, yields have pulled back from their session highs as geopolitical tensions drive recent price action. Investors remain on edge, balancing expectations for central bank policy against evolving risks on the global stage.

Commodities: Gas Deflates, Crude Rangebound, Metals Gain

In commodities, natural gas prices continue to deflate, extending recent losses. Crude oil remains rangebound, with supply and demand dynamics keeping prices in check. Meanwhile, metals are advancing, supported by broader macroeconomic factors and potential safe-haven demand amid geopolitical uncertainties.

Geopolitics: Russia Skips Munich Conference, Key Meetings Ahead

Geopolitical risks are front and center, with Russia announcing that its officials will not attend the Munich Security Conference. This adds another layer of uncertainty to global diplomatic relations. Meanwhile, US Vice President Vance and Ukrainian President Zelensky are set to meet at 11:00 EST. Zelensky’s recent remarks have tempered some of the optimism that had built around potential de-escalation.

Key Data and Events to Watch

Looking ahead, investors will be closely monitoring a slate of US economic data, including:

• Import/Export Prices
• Retail Sales
• Industrial Production & Capacity Utilization
• Manufacturing Output

Additionally, the Bank of Canada’s Senior Loan Officer Opinion Survey (SLOOS) is set for release, alongside speeches from Fed’s Logan and other key policymakers. These events will provide fresh insights into economic conditions and central bank policy trajectories.

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With geopolitical risks dominating sentiment and key economic data on deck, markets remain in a delicate balancing act. Investors will be watching for any signs of escalation—or de-escalation—while positioning ahead of critical US economic prints. Expect further volatility as the session progresses.