Investing.com - The Australian Stock Exchange (ASX) gained 1.3% after the first hour of Monday's trade as tensions between Israel and Iran seem to be diminishing. The market's focus is now shifting towards the critical inflation data set to be released on Wednesday.
Last week, a retaliatory missile strike from Israel on Iran, in response to a similar assault from Iran, led to a temporary dip in ASX shares to a three-month low. Gold and oil prices also spiked, but they later stabilized when Iran seemed to downplay the retaliatory actions, hinting at a possible halt in escalation.
US markets had varied reactions to the attacks on Friday. The S&P 500 and NASDAQ Composite dipped by 0.8% and 2%, respectively, while the Dow Jones Industrial Average saw a 0.6% increase.
Moving forward, traders will closely watch the US's private final consumption and gross domestic product (GDP) data due to be released later this week. This information will provide further insight into the potential timing of the Federal Reserve's rate cuts.
First-quarter GDP growth in the US is predicted to drop to roughly 2.5% from 3.4% in the final quarter of 2023. Despite this decline, the US growth rate is still considerably stronger compared to many of its global counterparts.
On Wednesday, Australia is set to release its latest quarterly consumer price figures. These are expected to show a decrease in annual inflation from 4.1% in the December quarter to 3.4%, a figure slightly lower than the Reserve Bank's projected 3.5%.
The annualised trimmed mean, a preferred measure of inflation for the Reserve Bank of Australia (RBA), is predicted to rise to 3.7%, just below the RBA's expected 3.8%.
In Asian markets, central bank actions are also a focal point this week. On Monday, China is likely to maintain its 1- and 5-year prime rates at 3.45 and 3.95%, respectively. On Friday, the Bank of Japan is also set to determine its policy rate, following its decision to exit a negative interest rate regime at the previous meeting in March. Despite this significant move, the Bank of Japan is projected to keep its policy rate target stable between zero and 0.1%.