Global markets enter the new trading week with positive momentum, fueled by encouraging developments from the latest US-China trade talks and upcoming key macroeconomic data releases. With equities extending their rally from April lows and investors eyeing inflation and retail numbers, this week could offer critical directional cues across major asset classes including stocks, commodities, and currencies.

Positive Sentiment Fuels Global Equities Ahead of US CPI Data

Equity markets start the week on firm footing, supported by progress in US-China trade dialogue and anticipation of softer inflation data. Investors remain focused on the continuation of the bull trend, especially across developed market indices such as the US500, NAS100, NKY225, GER40, AUS200, and HK50. Momentum remains the tactical strategy, with a preference for buying into strength as long as recent bullish formations hold.

Bitcoin is also mirroring this optimism. The cryptocurrency surged to $105k over the weekend before facing supply pressure. However, any further rally in S&P500 or Nasdaq futures during Asian trading could propel Bitcoin closer to its all-time high around $109k.

Crude Oil, Gold, and USD Index Face Diverging Outlooks

Brent crude surged 4% last week, defying bearish fundamentals. A daily close above $65.22 may confirm further upside toward the $68 resistance, the top of its recent trading range.

The US Dollar Index (DXY) continues to build on its bullish reversal, having closed above the neckline of an inverse head-and-shoulders pattern. A confirmation above this level could target the 103 mark. USD strength is currently favored against the EUR, CHF, and JPY, especially ahead of US CPI and retail sales data.

Meanwhile, gold may experience early pressure through Asian hours, with traders eyeing Friday’s low at $3274 as a short-term support level.

US-China Tariff Talks and Corporate Earnings Drive Risk Sentiment

Headline risk surrounding tariffs will remain a central theme this week. Positive commentary from both Washington and Beijing over the weekend highlighted “substantial progress” in talks. Markets now look for confirmation of a proposed reduction in US import tariffs on Chinese goods from 145% to 60%—a move that could offer strong risk-on support. However, patience is limited, and investors demand swift action, not a staggered approach.

On the corporate front, while US earnings season is winding down, Walmart’s Q1 2026 results (due Thursday pre-market) are expected to carry significant weight. As a major US retailer with a strong domestic supply chain, Walmart’s guidance will be closely examined for tariff exposure. Options pricing implies a ±5.3% move, exceeding its historical average and pointing to heightened investor sensitivity.

See more related articles: USD/CHF climbs US China trade tensions ease

Nvidia and AI: Market Awaits Key Policy Shift and Earnings

Nvidia enters a pivotal phase, as the AI Diffusion ruling is due this Thursday. Speculation suggests a potential reversal of Biden-era chip export restrictions by Trump, which could simplify regulations and boost sentiment in AI-focused equities. However, the real test for Nvidia lies in its Q1 earnings report on 28 May, with consensus forecasting $43.22 billion in revenue—a 9.9% year-over-year increase. A beat-and-raise scenario could re-establish Nvidia as a market leader, with price action above $125 likely triggering broader gains in Nasdaq 100 futures.

HK50 Index Watch: Alibaba and Tencent in Focus

The HK50 index has now fully recovered from its April drawdown, closing the gap formed on 7 April and retracing to the 61.8% Fibonacci level. A daily close above 23,000 would reinforce bullish conviction, while a move below 22,589 could trigger caution. Earnings releases from Tencent and Alibaba—two of the index’s heaviest weights—are poised to inject volatility and directional clarity this week.

US CPI and Retail Sales: Crucial for Fed Rate Cut Outlook

Market sensitivity is high ahead of US core CPI, PPI, and retail sales data. Inflation swaps suggest that any CPI impact from new tariffs will only materialize from July onward, but a hot print could still influence near-term sentiment. A core CPI under 2.7% year-over-year could bolster expectations for a July Fed rate cut, currently implied at 68%. Conversely, a print above 3% would reinforce USD strength and potentially trigger equity selling.

For equity bulls, the ideal setup would be soft inflation coupled with strong retail sales, while USD bulls would prefer hot numbers across both metrics—though not so hot as to spike volatility and unsettle FX markets.

Global Event Risks: UK, Australia Data in Focus

In the UK, attention turns to wage growth, employment figures, and Q1 GDP. Weak readings could raise the likelihood of a Bank of England rate cut in June.

Australian data includes business and consumer confidence, Q1 wage growth, and April employment. While a May rate cut is fully priced in, these releases could shift expectations for further cuts, especially in July, which currently sees a 56% implied probability. Markets are also pricing in three more 25bp cuts by year-end.

Conclusion

With markets buoyed by geopolitical progress and key macro data ahead, traders face a week of significant event risk. Momentum remains the prevailing theme across equities, but inflation and earnings data—particularly from Nvidia and Walmart—could reshape positioning. Meanwhile, developments in the US-China trade dialogue and the AI export policy shift will be crucial for sentiment. Flexibility and focus will be key as markets react to every datapoint and headline.

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