Global financial markets started the week on a muted note, with Wall Street and European shares ending flat to slightly lower on Monday. Investors are holding back ahead of the U.S. Federal Reserve’s high-profile Jackson Hole symposium later this week, where Chair Jerome Powell is expected to outline the path forward for U.S. interest rate policy.
At the same time, geopolitical attention turned to Washington, where Ukrainian President Volodymyr Zelenskiy met U.S. President Donald Trump. While Trump pledged American support for European security guarantees to Ukraine and raised the possibility of a trilateral meeting with Russian President Vladimir Putin, markets barely reacted.
“I don’t really see anything big in this or anything new or tangible,” said Marc Chandler, chief market strategist at Bannockburn Forex in New York, pointing out that Russia continues to escalate offensives even amid negotiations.
Market Moves: Cautious but Near Highs
On Wall Street, the S&P 500 closed little changed but stayed within striking distance of its record high hit on Friday. Across the Atlantic, the STOXX 600 ended marginally higher after touching its strongest level since March. The MSCI All Country World Index also held just below its recent peak.
Asian markets showed more momentum earlier in the session—Japan’s Nikkei hit another record high, Taiwan’s benchmark surged, and Chinese equities touched their highest level in a decade.
Also Read: Wall Street Ends Flat Ahead of Key Earnings, Fed Symposium, and Geopolitical Talks
Spotlight on Jackson Hole
The real driver this week is monetary policy. Investors are bracing for Powell’s remarks at Jackson Hole (August 21–23), which could set expectations ahead of the Fed’s September 17 meeting. Futures markets currently price in an 85% chance of a quarter-point rate cut, with additional easing likely by December.
“Powell will likely signal that risks to employment and inflation are more balanced, implying rates should move toward neutral,” wrote Citi’s chief U.S. economist Andrew Hollenhorst. “But he will stop short of committing to a September cut.”
Earnings and Economic Signals
Corporate earnings remain a strong tailwind for equities. S&P 500 companies collectively delivered 11% EPS growth this quarter, with 58% raising full-year guidance. Mega-cap tech firms once again led the charge.
This week’s retail earnings from Home Depot, Target, Lowe’s, and Walmart are set to provide deeper insights into U.S. consumer spending.
Also Read: Russian Oil Flows to Hungary and Slovakia Halted Amid Tensions—Budapest Blames Ukraine
Bonds, Currencies, and Commodities
Bond Markets: The U.S. yield curve steepened, with the gap between two-year and 10-year Treasuries widening to 57.8 basis points—the highest since mid-July. Long-term yields rose faster, pointing to firmer inflation expectations.
Forex: The dollar index dipped 0.3% to 98.114, pressured by Fed easing bets. The dollar rose 0.4% against the yen (147.82) while the euro slipped 0.3% to $1.1667.
Gold & Oil: Gold steadied at $3,333/oz after a sharp drop last week. Oil prices gained modestly after the Zelenskiy-Trump talks, with Brent up 1% at $66.52 and WTI crude up 0.9% to $63.34.
With markets hovering near record highs, traders are reluctant to make big moves before Powell’s speech. While geopolitical risks remain, particularly the uncertain U.S.-Ukraine-Russia triangle, monetary policy remains the defining catalyst for global risk sentiment.
