Middle East tensions flare again, but Wall Street keeps its eyes on artificial intelligence.
Global equities climbed to all-time highs on Monday as AI-driven optimism continued to outweigh fresh conflict in the Gulf. New U.S. strikes on Iranian targets over the weekend and Tehran's response unsettled energy markets without breaking the broader rally.
Key Details
Brent crude jumped nearly 3% to $94/barrel after U.S. forces struck Iranian targets and Kuwait intercepted missile and drone attacks.
MSCI All-World rose 0.13%, near record levels. S&P 500 futures up 0.3%, Nasdaq futures up 0.5%.
South Korea's May exports hit a record $87.75 billion - the strongest annual growth in over four decades - largely on AI-related demand.
NVIDIA CEO Jensen Huang takes the stage at Computex in Taiwan today to unveil the company's latest AI roadmap.
Market Reaction
Rising oil prices put pressure on bond markets. U.S. 10-year yields climbed 1 basis point to 4.46%, while German 10-year yields jumped 4.2 bps to 2.98%. The dollar gained 0.12% against the yen, pushing the pair to 159.46, dangerously close to the 160 level that's historically triggered Japanese intervention.
European stocks edged lower as energy gains were offset by weakness in airlines and defence. Markets in Tokyo and Seoul held near all-time highs.
Why It Matters for Traders
Markets are pricing a 50/50 chance the Fed hikes rates by year-end - a scenario that keeps the dollar firm and limits upside for bonds. Any escalation in the Gulf that delays an Iran-U.S. deal could further spike oil, stoke inflation, and force the Fed's hand. At the same time, AI momentum is proving resilient enough to absorb the noise for now.
What to Watch
Friday's U.S. payrolls report is the week's main event. Forecasts point to 85,000 new jobs, with unemployment steady at 4.3%. A stronger reading would sharpen rate hike bets and likely lift the dollar further. Fed speakers will set the tone throughout the week - watch for any shift away from the current neutral-to-easing stance. Iran-U.S. deal progress (or the lack of it) remains the wildcard for oil and broader risk sentiment.
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