Weekend TACO fuels risk appetite

Global equities have kicked off the week on the front foot, picking up right where Friday’s session left off. US futures are pointing to a green open as the weekend delivered the de-escalation traders had been hoping for.

President Trump confirmed peace talks with Iran will resume, having called off the strikes that had rattled markets into Friday’s close, with Gulf allies including Saudi Arabia said to have pushed hard for diplomacy over confrontation. Crude has fallen back in response, with WTI slipping toward the high-$70s and Brent back near $84 a barrel, easing the inflation and energy-security premium that had been building through the second half of last week. The dollar, meanwhile, has steadied above the 100 level after last week’s sharp Fed-driven wobble.

Corporate earnings remain the other pillar propping up sentiment. Amazon’s 15%-plus surge and Alphabet’s rally on the back of last week’s results underlined that the AI-monetisation story investors have been waiting for is starting to show up in the numbers, not just the capex. With roughly 300 S&P 500 companies now through reporting, around 85% have beaten estimates and aggregate profit growth is tracking above 47%, keeping this earnings season on course to be one of the strongest in years. The calendar stays busy from here: Palantir reports after tonight’s close, SpaceX delivers its first results as a listed company on Tuesday, and Disney and AMD round out a week that will keep the AI and mega-cap tech trade firmly in focus.

Data will do the rest of the talking. July’s ISM Manufacturing PMI and construction spending land later today, but the week’s real test comes Friday with the non-farm payrolls report, following June’s sharp slowdown to just 57,000 jobs. That print, together with CPI due the week after, will shape how the Fed approaches its September meeting after last week’s decision to hold rates saw three officials dissent in favour of a hike. Markets are currently pricing close to a 70% chance of a September hike, and any softness in Friday’s jobs number would put that pricing to the test.