
On Monday, the S&P 500 and Nasdaq reached fresh record highs supported by strong corporate earnings and continued optimism around the economy and labor market. However, futures today moved slightly lower as investors prepared for the release of April’s U.S. inflation data, which is expected to show inflation near a three-year high. Investors are now closely watching the upcoming CPI report for clues on inflation and future Federal Reserve policy.
Markets remain focused on geopolitical tensions after President Donald Trump rejected Iran’s latest proposal to end the conflict. Oil prices rose as concerns over the Strait of Hormuz and Middle East stability continued to support energy markets.
Annual inflation is expected to rise to 3.7% in April. Strong earnings and resilient economic data continue supporting bullish sentiment in equities, with many investors viewing any short-term pullback as a buying opportunity.
In the U.K., political uncertainty added further pressure after more than 70 Labour Party lawmakers reportedly called for Prime Minister Keir Starmer to resign or announce a timeline for stepping down following poor local election results. U.K. bond yields rose as investors reacted to the growing political turmoil.
Gold prices pulled back on Tuesday after reaching a three-week high, slipping below the $4,700 level as the U.S. dollar strengthened ahead of key U.S. inflation data.
The geopolitical tensions helped support oil prices, increasing concerns that higher energy costs could fuel inflation and keep central banks, including the Federal Reserve, more hawkish. This boosted the U.S. dollar and pressured non-yielding assets like gold.
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