Markets brace for a tense week filled with geopolitical anxieties, trade disputes, and critical central bank decisions. Here are five main developments closely monitored by investors:

1. Escalating Israel-Iran Conflict Influences Oil Markets

The Middle East has erupted in violence over the weekend as Israel and Iran engaged in military exchanges. Despite diplomatic efforts, Tehran has rejected ceasefire proposals while Israeli airstrikes persist targeting nuclear sites.

As of early Tuesday, Brent crude increased by 0.4% to $74.53, and WTI crude rose by 0.5% to $71.64, with initial gains over $4. These developments spark fears of a wider regional conflict, heightening investor focus on energy supply disruptions and potential inflationary impacts.

2. G7 Summit Focused on Diplomacy and Trade Tension

The G7 summit taking place in Canada is addressing two primary issues: the Israel-Iran conflict and ongoing trade disputes with the U.S.

A joint appeal for de-escalation will likely emerge from this summit, but political tensions remain high. German Chancellor Friedrich Merz emphasizes a dual legal path: support for Israel’s right to defend itself while promoting Iran to abandon nuclear pursuits.

Furthermore, Canadian PM Mark Carney signaled readiness to retaliate against U.S. tariffs on steel and aluminum if U.S. action is insufficient, creating uncertainty around global cooperation.

3. Anticipated Federal Reserve Decision and Other Central Banks

Market attention on Wednesday will rest on the Federal Reserve’s interest rate meeting, whererates are likely to remain stable at 4.25% to 4.5%. However, the market will analyze the Fed’s forward guidance amidst rising oil prices exerting inflationary pressure in the current environment.

The Fed navigates a complex landscape: stable inflation, solid employment data, and ongoing trade policy impacts from Trump’s tariffs.

Additional rate announcements are expected this week from major central banks in Switzerland, Sweden, the U.K., and Norway.

4. U.S. Retail Sales as an Economic Indicator

U.S. retail sales data for May is set to provide critical insights into domestic demand and overall consumer strength. A forecasted decline of 0.6% monthly follows a modest growth of 0.1% in April.

Consumer sentiment improved in June according to University of Michigan figures, boosted by hopes of a U.S.-China trade resolution. However, rising oil costs linked to geopolitical instability could quickly dampen that optimism, potentially impacting future consumer spending.

5. China’s Mixed Economic Indicators

China reported inconsistent economic figures for May, illustrating the complicated global recovery. Industrial production climbed 5.8% YoY, slightly below the estimated 5.9% and down from the previous month’s 6.1% growth. Weak export demand from the U.S. reflects ongoing tariff impacts.

On a more positive note, Chinese retail sales exceeded expectations, driven by holiday expenditures and local promotional events, signaling some consumer confidence amidst external challenges.

For ongoing updates and insights into real-time economic metrics, investors should stay informed through market analysis tools.