Global risk sentiment ended Friday on a cautiously constructive note as US equities posted their first winning week in three, aided by a pullback in oil prices — Brent crude fell 2.1% to $104.32/bbl — and modest intraday relief in Treasury yields, even as the US 10-year held near 5.18%, close to multi-year highs not seen since 2007. Central banks remained firmly in hawkish territory: the ECB delivered a 25bp hike to a 2.50% deposit rate with 2026 inflation projected at 3.0%, while multiple Bank of England officials signalled potential further hikes if energy prices remain elevated, and Fed's Williams flagged another US rate rise as likely this year. Geopolitical tensions centred on Iran and potential Strait of Hormuz disruptions continued to underpin energy market volatility, even as the short-term oil pullback provided some relief to inflation expectations. The two-month extension of the US-China trade truce offered limited comfort, leaving tariffs, rare earths and technology restrictions unresolved.
For Asia-Pacific markets opening this Monday, the dominant cross-asset signals are a steepening US yield curve — with the 2s10s spread widening as the 10-year rose 7bp versus 2bp for the 2-year — a VIX that fell 5.1% to 14.87 suggesting near-term complacency, and an AUD/USD holding near 0.7016, marginally firmer on the day. The ASX 200 closed Friday down 0.43% at 8,665.0, underperforming Wall Street, with weakness concentrated in Industrials (-1.66%), Consumer Discretionary (-1.36%) and Utilities (-1.25%), partly offset by IT (+0.73%) and Financials (+0.27%). With China's SSE and Hang Seng both lower on Friday and iron ore soft near $97/t, materials names face continued headwinds at the open, while elevated bond yields globally will keep pressure on rate-sensitive REITs and yield proxies on the ASX.