The European session saw a broadly positive tone with both the DAX 40 and FTSE 100 posting strong gains. European markets shrugged off initial geopolitical jitters and found support from strong corporate earnings and surprisingly robust Chinese manufacturing PMI data, which hit its highest level since December 2020. Commodity markets were highly volatile; Brent crude initially surged to a four-year high on news of potential US military actions against Iran, but later pared some gains alongside WTI, though both remain elevated due to persistent supply concerns. Gold and silver also saw significant inflows, benefiting from the safe-haven demand generated by the escalating Middle East tensions.

Heading into the US open, equity futures are mixed. The S&P 500 and Nasdaq 100 futures are relatively flat to slightly positive, digesting a combination of factors including mixed Q1 tech earnings (with Alphabet showing strength from AI) and underlying inflation concerns. The Dow Jones futures are lagging, reflecting a more cautious stance among investors. The spotlight for the US session will be firmly on the release of the Personal Consumption Expenditures (PCE) inflation data, the Federal Reserve's preferred inflation gauge. A hotter-than-expected reading could reinforce the hawkish undertones from some Fed members and potentially weigh on risk assets. The ongoing geopolitical situation in the Middle East will also remain a key overhang, capable of shifting market sentiment rapidly.

For the remainder of the US session, the primary risk event is the release of the PCE inflation data. Any deviation from expectations could significantly impact interest rate expectations and, consequently, equity and bond markets. Alongside this, several Federal Reserve officials are scheduled to speak, and their commentary will be closely scrutinized for further clues on the central bank's monetary policy path. Investors will also monitor the evolving situation concerning US military options for Iran, as any concrete developments could trigger further volatility in oil prices and broad risk sentiment. Corporate earnings releases, although perhaps less impactful than macroeconomic data today, will continue to contribute to sector-specific movements and overall market sentiment given the mixed bag seen recently in the tech sector.