Ahead of the open, a piece of news

—What matters on Monday isn’t what Iran says, but how oil prices are “translating” that statement.

Ahead of the Monday open, the latest news came in:
The U.S. Central Command said Iran launched a third round of airstrikes. In addition, Fars News Agency reported that Iran asked the United States to implement the “agreements reached” before holding any talks. It said the U.S. must first meet the agreed conditions in order to normalize the Strait of Hormuz.

Investors will keep a close watch as global markets open at 6:00 a.m. Beijing time on Monday.

First, around 23:00 on Friday night, gold and U.S. stocks began rebounding, after Trump posted a tweet saying, “Peace negotiations can continue without a ceasefire.” Now, however, Iran has rejected Trump’s claim, posing a challenge to Monday’s market trajectory.

Second, the most important part will be how the market speaks at Monday’s open. Analysts will watch whether “bad news fails to stick” (if it’s just a small rise or a small fall, that would be normal digestion after weekend risks). Oil prices are the key focus: if they only rise modestly, the impact will be controllable. At that point, attention will quickly shift, because the U.S. will release June CPI data on Tuesday. U.S. stocks will face pressure, but as long as oil prices don’t run out of control (U.S. crude doesn’t stay above $75), investors will continue buying AI and large-cap tech. However, once oil prices move back above $75 and approach $80, the market will start trading again on “energy inflation, Fed rate hikes, and valuation compression.”

Third, there are two storylines competing for interpretation in the market right now: the first is that geopolitical risk is manageable, oil can’t rise much, Fed rate-hike expectations decline, and AI continues to be crowded; the second is that oil keeps surging back up, inflation re-accelerates, the Fed can’t ease, and valuations come under renewed pressure.

Fourth, the market will watch three key technical levels at the same time: whether U.S. crude can regain $75, whether the 10-year U.S. Treasury yield can break above 4.60%, and whether the U.S. Dollar Index can hold back above 101. This will be the near-term pivot between bulls and bears for global markets.

That said, Monday isn’t the final direction day—it's a repricing day of risk ahead of next week’s CPI. The question the market has to answer isn’t “will the war end,” but “can geopolitics keep pushing up inflation expectations.” If oil prices can’t hold $75, the bad news may be treated by the market as background noise; if oil prices move back toward $80, assets may be forced back to the original question: whether the Fed can continue pretending it didn’t notice.