As of 12:00 Germany time (CEST, UTC+2)
TL;DR: Markets opened the week with a relief rally after the United States and Iran paused their latest round of attacks, sending oil sharply lower and easing part of last week’s inflation shock. The move helped travel, retail and other fuel-sensitive sectors, while energy shares lagged. The relief was not broad enough to remove the bigger question facing markets this week: whether Big Tech earnings can defend the AI spending cycle before a highly uncertain Federal Reserve decision.
In Asian Equity Markets stocks were mixed as lower oil improved the macro backdrop but did not fully repair confidence in the technology trade. Chinese markets found support from the debut of CXMT, whose shares surged more than 400 percent in Shanghai after Asia’s largest IPO of the year. The listing showed that demand for domestic chip exposure remains intense, but the broader regional technology complex stayed fragile after weeks of selling. Investors remain cautious ahead of U.S. megacap earnings and South Korean chip results later in the week.
In European Equity Markets stocks were broadly steady as lower crude helped consumer-facing sectors but weighed on energy producers. The pan-European STOXX 600 traded close to flat, with travel and leisure shares among the stronger performers as lower fuel prices improved the outlook for airlines. Energy stocks fell as Brent reversed part of last week’s spike. Technology shares remained the main drag, with ASML under pressure as investors continued to question whether AI-related valuations can hold up through earnings season.
In U.S. Equity Markets futures were firmer early in the session, but the market’s attention was already moving toward the heavy earnings calendar. Microsoft, Meta, Amazon and Apple are due to report this week, making the next few sessions a direct test of the AI trade after Alphabet and Tesla raised concerns about cash burn and capital spending. Investors are not only looking for revenue growth. They want proof that AI investment is producing margins, cash generation and credible returns.
In Commodities Markets oil fell sharply after Washington paused airstrikes on Iran and Tehran signalled it would halt attacks on U.S. bases if the pause held. Brent dropped below $90 per barrel after moving above $100 last week, while WTI also fell heavily. The decline reduced immediate inflation pressure and helped risk appetite, but the market is not treating the conflict as resolved. The Strait of Hormuz and Red Sea routes remain sensitive to any renewed escalation, and energy prices can reprice quickly if talks fail.
In Currency Markets the dollar was broadly steady as lower oil was offset by caution ahead of the Fed decision. The yen remained weak near historic lows, although the drop in crude reduced some pressure on Japan’s import bill. Oil-sensitive currencies were more mixed, with the Norwegian krone under pressure as crude fell. Currency markets are effectively waiting for central-bank signals later in the week, especially with the Fed, Bank of England and Bank of Japan all in focus.
In Bond Markets Treasury yields eased only modestly despite the sharp fall in oil. The U.S. 10-year yield moved lower but remained around the mid-4.6 percent area, while the 30-year yield stayed above 5 percent. That reaction matters. The bond market is not fully accepting that one day of lower crude removes the inflation risk. Traders still see a meaningful chance that the Federal Reserve raises rates this week, especially with Kevin Warsh moving away from the old forward-guidance approach.
The Cross-Asset Read
Monday’s relief was real, but it was also incomplete.
Oil below $90 is a better market backdrop than Brent above $100. It helps airlines, consumers, inflation expectations and parts of Europe that had been exposed to last week’s energy shock. That is why cyclicals could stabilise and why the market did not open the week in another broad liquidation.
The problem is that lower oil does not answer the AI cash-flow question.
Alphabet and Tesla already showed that investors are becoming less tolerant of heavy spending without clear near-term returns. This week brings the larger test. Microsoft, Meta, Amazon and Apple need to show that AI capex is translating into revenue quality, margins and durable cash generation. A weaker oil price helps the discount-rate backdrop, but it does not justify the spending cycle on its own.
The flag is Brent at $90 and the U.S. 10-year yield at 4.65 percent. If Brent stays below $90 and the 10-year moves below 4.65 percent, earnings will have more room to stabilise risk appetite. If yields stay elevated while chip shares keep falling, the market is telling us that the issue is not just oil. It is confidence in the AI investment model.
The energy shock has eased.
The earnings test has only started.
Subscribe to IronPeak Research for concise daily market wraps and cross-asset macro context
