The G7 leaders have come out and strongly condemned Iran's retaliatory attack on Israel, involving over 300 drones and missiles. They expressed their full solidarity with Israel and committed to taking further measures to stabilise the situation and avoid further escalation. The UN Secretary-General called for maximum restraint to prevent a full-scale conflict in the Middle East. In response, the U.S. awarded Lockheed Martin a $17 billion contract to develop the Next Generation Interceptor to defend against intercontinental ballistic missile threats from countries like Iran and North Korea. This contract represents a boost for Lockheed after recent setbacks, as the U.S. plans to buy 20 interceptors to be deployed in Alaska by 2028.

EQUITY

The stock market closed lower on Monday as Treasury yields spiked, better retail sales data and geopolitical tensions pointed towards higher for longer rates. The financial sector stocks, including Goldman Sachs and Charles Schwab, performed better on earnings. Across the sea, the Chinese economy reported positive GDP growth in the first quarter, though other Asian markets are on selloffs due to concerns over U.S. interest rates. The Vix is sending a warning as it reaches 6 months high.

GOLD

Gold prices continue to climb, reaching near-record levels once again, with Citi Research analysts revising their forecasts upwards, projecting prices could reach $3,000 per ounce over the next 6–18 months. They cited physical consumption and central bank buying now that gold has decoupled from U.S. rates and the U.S. dollar. Concerns over Middle East escalation have also driven up safe-haven buying, including gold.

OIL

Crude prices are stronger on positive economic growth in China, and instability in the Middle East after Iran's attack on Israel. However, the modest damage recorded eased supply disruption concerns, leading to a pullback in oil prices. Additionally, rising U.S. oil production and the potential for higher interest rates in the United States added further downward pressure on the commodity.

CURRENCY

The U.S. dollar shot to five-month peak, driven by retail sales data and changing narrative on interest rate path. This has raised the prospect of intervention from Japanese authorities as the yen plummeted to a 34-year low versus the dollar. In China, the yuan edged lower even as the economy grew at a higher pace in the first quarter, underscoring the uneven nature of the country's recovery, with its retail sales falling short of expectations.