Weekly Capital Market Watch

US equities were volatile, driven primarily by Middle East developments and oil price swings rather than economic data. Markets started the week stronger on hopes of de-escalation but weakened as uncertainty persisted. Large-cap indexes, including the S&P 500 and Nasdaq Composite, declined for a fifth consecutive week, while mid- and small-cap stocks posted modest gains. Value stocks continued to outperform growth.

Economic data showed early signs of slowdown. The S&P Global Flash PMI fell to 51.4, an 11-month low, reflecting weaker services activity. At the same time, inflation pressures intensified, largely due to higher energy costs. Consumer sentiment also deteriorated, with inflation expectations rising, suggesting households are becoming more cautious.

Bond markets remained volatile as investors reassessed monetary policy expectations. Rising oil prices and supply disruptions have increased inflation risks, leading markets to consider the possibility of further tightening by the Federal Reserve. Treasury yields fluctuated but ended largely unchanged, while credit markets were stable, supported by ongoing corporate activity.

European equities were relatively resilient. The STOXX Europe 600 rose slightly, although performance across countries was mixed. Investor sentiment remained sensitive to geopolitical uncertainty and its potential impact on growth, keeping markets cautious despite modest gains.