Following the resumption of missile fire between Israel and Iran over the weekend, fears of heightened regional tensions were partially eased yesterday by statements from Donald Trump. He called for an 'immediate ceasefire' between the two countries, claiming that discussions were underway to end the hostilities.

On the sidelines of the NBA game between the New York Knicks and the San Antonio Spurs, the U.S. President even asserted that Washington was in the 'final stages' of reaching an agreement with Tehran.

While hostilities between Iran and Israel are currently at a standstill, tensions have not fully receded, as both countries have threatened to respond forcefully to any potential new attacks.

New York and Asia buoyed by semiconductor revival

Contributing to the positive sentiment, major Wall Street benchmarks regained some ground on Monday following the sharp correction seen late last week.

Driven by a rebound in technology stocks, and semiconductors in particular, the S&P 500 (+0.3%) and the Nasdaq 100 (+1.6%) ended in the green, while the Dow Jones remained slightly behind (-0.2%).

Renewed optimism regarding the AI theme benefited chip heavyweights, such as Intel, which surged over 11% following a report by The Information suggesting that Alphabet had placed an order for over three million tensor processing units to be produced in 2028.

Bargain hunting in the tech sector also benefited Asian markets. The recovery of Asian semiconductor manufacturers notably boosted the Tokyo Stock Exchange, where the Nikkei index gained nearly 2% by the end of the session.

In China, the trend was also favorable, with the CSI 300 index of large-cap mainland stocks rising by 1.2%.

Markets directionless ahead of US inflation figures

Although the tone has turned more positive, the chances of a resumption of the consolidation phase and profit-taking remain significant given the lack of catalysts to provide market direction.

In the absence of major earnings reports in Europe or the United States, market participants' attention is expected to focus tomorrow on the latest U.S. inflation figures, which will provide further insight into the future path of Fed monetary policy.

The at least temporary easing of fears regarding escalation in the Middle East is reflected in a rise in bond yields: the U.S. 10-year is back above 4.55%, while the 10-year German Bund yield tightened by 2.5 basis points to over 3.06% in anticipation of a rate hike by the ECB this Thursday.

On the foreign exchange market, the euro rose 0.1% to 1.1545 against the dollar, with the single currency supported by current interest in risk assets and the prospects of monetary tightening in the Old Continent.

The easing of fears over an escalation of the conflict in the Gulf has led to a reversal in oil prices. Brent crude fell back to 93 dollars, and West Texas Intermediate (WTI) dropped 1.5% to 89.9 dollars. Both are moving further away from the peaks reached in April, which were above 120 and 110 dollars respectively.