What investors can expect from stock markets worldwide this week

Dubai: Stock markets enter the week on a high, with global investor sentiment boosted by renewed progress in US-China trade talks, easing geopolitical tensions, and expectations of a US interest rate cut by September.

Last Friday, key Wall Street benchmarks closed at fresh all-time highs, reflecting strong recovery from the spring market slump triggered by US tariffs. Similar gains were seen by markets elsewhere in the world.

European, Asian, and Middle Eastern markets rose at the end of last week, as the Iran-Israel ceasefire added another layer of geopolitical calm, contributing to positive risk sentiment.

While the week ahead may still see volatility, analysts say the overall backdrop is increasingly supportive of stock prices.

Markets welcomed news that Washington and Beijing are finalizing a framework for advancing trade negotiations, reversing much of the negative sentiment that dominated headlines since April.

However, fresh tensions with Canada briefly shook investor confidence late Friday after US President Donald Trump criticized Ottawa’s digital services tax.

Despite that, markets recovered into the close — a sign that investors remain focused on the bigger picture: improving global trade dynamics.

“There is hope in the market,” said Jason Schenker of Prestige Economics. “Maybe some over-optimism, but definitely more optimism than before.”

Beyond trade, booming investment in artificial intelligence is another key driver of current market momentum. Tech-heavy indices like the Nasdaq are benefiting from heightened expectations around AI’s economic impact — a trend likely to remain a market-moving force in the days ahead.

At the same time, rising hopes that the U.S. Federal Reserve may cut interest rates in September are adding fuel to the rally. The Fed’s preferred inflation gauge — the personal consumption expenditures (PCE) price index — rose 2.3% year-on-year in May, slightly higher than April but in line with forecasts.

“So far, tariffs haven’t led to runaway inflation,” said Tom Cahill, CIO of Ventura Wealth Management. “That gives the Fed some flexibility — and markets are starting to price in a rate cut.”

Global cues this week will likely revolve around:

In short, after months of turbulence, investors are heading into the new week with cautious optimism — hoping the rebound holds, but aware that headlines can still turn the tide.