📆 Wednesday, May 21
► European markets trades slightly lower as recent optimism & the risk-on sentiment faded. The Stoxx 600 dropped 0.3%, pressured by weakness in autos and consumer sectors. Germany’s DAX fell 0.25%, while France’s CAC 40 lost 0.55%. The FTSE 100 currently trades flat. Rising bond yields in the eurozone, along with geopolitical uncertainty and mounting US budget tensions, pushed investors toward safer currencies like the Swiss franc and the EUR, which increasingly gains favor over the USD (even as quasi safe haven). Focus remains on US fiscal talks and Fed commentary for direction. Higher oil prices weighed on the DAX while having a rather positive short-term impact on the FTSE 100.
► US futures traded lower, with the S&P 500 and Nasdaq 100 futures down around 0.7% and Dow futures off 0.75%. Tuesday marked the end of a six-session rally that had added nearly 5% to the S&P 500. With valuation concerns, a rising US deficit, and renewed Middle East risks, investor sentiment turned defensive. Oil spiked on reports of a potential Israeli strike on Iran, while Fed official Musalem cautioned that tariffs could restrain growth, adding to the cautious mood. Focus now turns to more Fed speakers and the FOMC minutes due Thursday.
► Asian markets closed mostly higher, although sentiment showed signs of becoming more cautious. The MSCI Asia Pacific Index gained 0.5%, led by Korea (Kospi + 0.91%) and Australia (ASX 200 + 0.52%). Japan’s markets (Nikkei 225 – 0.58%) were overall negative as the yen strengthened and a weak bond auction pressured sentiment. China held steady (Hang Seng + 0.62%; Shanghai + 0.21%), with investors monitoring currency alignment signals and trade commentary from the US. Regional markets benefited from a weaker dollar and improved risk sentiment in Asia, but geopolitical developments and lingering US debt jitters capped upside.
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