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The ceasefire agreement between Israel and Hezbollah triggered mixed market reactions. While the initial deal led to a sharp drop in oil prices, ongoing violence in Southern Lebanon and Iran's dissatisfaction reversed some of these gains. Canada's April retail sales data showed a headline increase of +0.5% but core sales declined by -0.7%, highlighting underlying weakness. UK Prime Minister Keir Starmer faces internal pressure to set a timeline for leaving office, adding to political uncertainty. Meanwhile, Iran announced plans for future talks with the US, though tensions remain. Gold and the S&P 500 futures declined, while USD/CAD hit a November high due to weaker Canadian economic data.
The ceasefire's fragility and geopolitical risks are key concerns for traders. Oil prices remain volatile due to Middle East tensions, while gold's inability to hold gains suggests weak demand for safe-haven assets. The loonie's underperformance reflects concerns about Canada's economic fundamentals. For the week ahead, the Fed's hawkish stance and AI sector momentum will influence market direction. Traders should monitor developments in Lebanon and the potential for renewed hostilities.
MENA investors should watch how regional tensions impact oil prices, a critical commodity for Gulf economies. The UK's political instability could affect global risk sentiment, while the USD/CAD pair's strength highlights the Canadian dollar's vulnerability. Investors should also track Iran-US relations and their potential spillover effects on energy markets. The coming week will test whether the ceasefire holds and whether markets can stabilize.
