Inflation worries, key U.S. data, and higher oil prices set the tone for Monday’s markets

Global markets on Monday are likely to be driven by a combination of fresh U.S. economic data, shifting expectations around inflation and interest rates, and continued strength in the energy sector tied to higher oil prices and geopolitical tensions. First, investors will focus on key U.S. macroeconomic releases, including January new home sales and February Consumer Confidence. These reports help gauge the health of the consumer and housing markets, which are central to overall economic growth. Strong consumer confidence and resilient housing data would support the view that household spending can continue to underpin the economy, which tends to be positive for global risk assets. However, any signs of weakening sentiment or slowing housing activity could revive concerns about a potential growth slowdown. These data will also be interpreted alongside major earnings from large, globally followed companies such as Home Depot, Alibaba, American Tower, and Keurig Dr Pepper, which serve as real‑time checks on consumer demand and business investment trends worldwide. Together, these releases will shape expectations for how robust the U.S. economy remains as markets move into the spring spending season. At the same time, elevated inflation expectations remain a key overhang. The recent upside surprise in core PCE inflation, running at 3% year‑over‑year versus the Federal Reserve’s 2% target, has reinforced the narrative that interest rates may stay higher for longer. This environment tends to pressure growth and rate‑sensitive sectors, such as technology, and can weigh on overall equity valuations globally as investors reassess discount rates and future earnings assumptions. Markets will therefore interpret Monday’s data and corporate commentary through the lens of whether inflation is likely to remain sticky, and what that implies for the timing and magnitude of any future central bank rate cuts. Finally, the energy sector is set to remain a major driver of market sentiment. Crude oil prices have climbed to six‑month highs, supported by rising geopolitical tensions between the U.S. and Iran. Higher oil prices are boosting energy company profits and have contributed to a notable rotation into value‑oriented, commodity‑linked sectors this year. However, sustained strength in crude also raises input costs for transportation, manufacturing, and consumer goods, potentially adding to inflation pressures and squeezing margins in fuel‑sensitive industries such as airlines. On Monday, investors will be weighing the benefits of stronger energy earnings against the risks of higher costs and renewed inflationary pressures for the broader global economy. Overall, Monday’s trading is likely to hinge on how the new economic data and corporate updates interact with already‑elevated inflation and interest‑rate expectations, all against a backdrop of rising oil prices and geopolitical uncertainty.