In April, the violent rebound exhausted its momentum? "Fear of heights" spreads in global stock markets below new highs.

The rebound of risk assets in April is unstoppable, withstanding multiple tests such as stalled negotiations, signs of inflation resurgence, and the succession turmoil at the Federal Reserve. Now, investors may face a new challenge - the possibility that the rapid rise in asset prices could hinder further market gains. Global stock markets started the week at or near historical highs. The S&P 500 index has risen nearly 10% since the end of March, poised to deliver its best monthly performance since the end of 2020. Last Friday, the US Department of Justice concluded its investigation into Federal Reserve Chair Powell, clearing the way for Kevin Wash's nomination confirmation and the market's bet that the Federal Reserve may resume rate cuts this year, pushing down US bond yields. Strong corporate profits and resilient economy have pushed the S&P 500 index about 3% higher than its pre-Iran conflict levels. Last Friday, with hopes of progress in peace talks between the US and Iran over the weekend, the stock market received a boost. However, conflict risks have not disappeared: the talks have been canceled, oil prices remain high, and with traders preparing for more inflation shocks, the still high US bond yields are pushing up borrowing costs across the market. Francis Tan, Chief Strategist for Asia at Indosuez Wealth in Singapore, bluntly stated, "The market is currently moving at 120 kilometers per hour, and there might be little room to maneuver when it's time to change lanes. I personally remain cautious about this." There are signs that investors' enthusiasm for the biggest beneficiaries of this month-long rally may be waning: the largest US crude oil ETF (USO.US) is expected to see the largest monthly outflow since 2009, while one of the largest semiconductor funds, Semiconductor ETF-iShares (SOXX.US), experienced the largest weekly outflow ever after record inflows. Both of these funds are among the most crowded trades in the current market. John Tully, Head of Global Macro Sales at Bank of America Corp Securities, wrote in a report to clients last Sunday, "We are seeing more protective buying at higher levels." He added that according to the bank's trading desk, investors should hedge in areas of the market sensitive to interest rates, such as small cap stocks, regional banks, and gold. He also pointed out that investors who see gold as a high-volatility risk asset may still be washed out of the market due to underperformance. This week, investors will have the opportunity to glimpse key signals of the earnings performance of US companies. Alphabet Inc. Class C (GOOGL.US), Microsoft Corporation (MSFT.US), Amazon.com, Inc. (AMZN.US), and Meta Platforms (META.US) will report earnings on Wednesday, with Apple Inc. (AAPL.US) following the next day. These five companies collectively account for one-fourth of the total market value of the S&P 500 index. Michael Romano, Head of Stock Derivatives Sales for Hedge Funds at UBS Group AG Securities, wrote in a report to clients last Sunday, "Since the low in March, risk assets have seen a violent rebound, causing investors to be cautious about the earnings of large tech stocks and questioning whether the good news has been fully priced in. Earnings reports for large tech stocks this week may drive catch-up rallies between super-sized cloud computing companies, but expectations are high, and positions are already quite crowded." Efforts to restart peace talks and end the Iran conflict suffered a setback over the weekend as US President Trump canceled the scheduled trip of his senior envoy and Iran stated that it would not participate in talks if threatened. On Saturday, Trump informed Jared Kushner and Steve Witkoff that their trip to Pakistan (as mediators) was canceled, later telling reporters that Iran had "set some conditions, but they're not good enough yet." Iranian President Masoud Pezeshijian stated that Iran would not accept forced negotiations under threat or blockade. Although the ceasefire agreement has been largely maintained since early April, both countries are still maintaining blockades in the Strait of Hormuz, making this key energy passage almost impassable. Market expectations of progress in negotiations had pushed oil prices lower last Friday, with WTI crude futures falling 1.5% to above $94 per barrel. However, this decline partly reversed the 13% increase during the week, which was still the largest gain since the early March conflict erupted and caused oil prices to surge.