AI disruption fears, trade tensions, and key US data expectations set a cautious tone for markets

Global markets on Monday are likely to be driven by three main forces: ongoing anxiety around artificial intelligence (AI) disruption in the technology sector, renewed geopolitical and trade tensions, and investor positioning ahead of key upcoming U.S. economic data. First, concerns that AI could disrupt traditional IT and technology service models are weighing heavily on tech-related shares. Indian IT stocks have been hit particularly hard, with the Nifty IT index down sharply year-to-date and entering bear-market territory. This sector stress matters beyond India because global investors often treat large IT and technology names as a barometer for growth and innovation. Persistent selling pressure in this segment can drag on broader equity indices worldwide, especially in markets and funds that are heavily exposed to tech and IT services. Second, geopolitical and trade risks are back in focus. President Trump’s threats of new tariffs on Canada, South Korea, and several European countries increase uncertainty around global trade flows and diplomatic relations. Even if no immediate measures are implemented, the possibility of new trade barriers can dampen business confidence, disrupt supply-chain planning, and make investors more cautious about risk assets such as equities. This kind of policy overhang tends to keep volatility elevated and can cap market rallies. Third, investors are positioning ahead of a cluster of important U.S. economic releases later in the week, including the Federal Reserve’s preferred inflation gauge (PCE), the first estimate of fourth-quarter GDP, flash PMI surveys, and the Fed meeting minutes. While these data points are not released on Monday, expectations around them will shape trading as investors try to gauge the strength of the U.S. economy and the likely path of interest rates. Any shift in perceived inflation or growth trends could quickly alter views on how long monetary policy will stay restrictive, which in turn affects global equity valuations. Taken together, these factors create a cautious tone for Monday’s session: technology-sector weakness linked to AI disruption fears, heightened trade and geopolitical uncertainty, and a wait-and-see attitude ahead of key U.S. data are all likely to keep risk appetite subdued and volatility elevated across global markets.