Stock futures are flat after a soft inflation reading lifts market spirits, but the rally may be short-lived. The consumer price index fell 0.4% in June, bringing the annual inflation rate to 3.5%, which is a relief to investors. However, the Federal Reserve's decision to raise interest rates remains a key concern. The probability of a rate hike at the central bank's July meeting has fallen, but markets still price in an increase later this year. Energy prices are on the rise again, and AI is proving to be an inflationary force. Investors are also focused on earnings season, with major reports from United Airlines, Morgan Stanley, Johnson & Johnson, and BlackRock expected on Wednesday. The market's reaction to these earnings will be crucial in determining the future direction of the stock market. The Kospi in South Korea has led the gains in Asia-Pacific markets, with a 6.3% rise at the open. However, the market's performance may be affected by the recent airstrikes on Iran and the Middle East tensions. In contrast, Pentair's shares have dropped after disappointing preliminary results, and IBM's shares have tumbled 25% after the company warned of lower-than-expected second-quarter profits. The market's volatility and the impact of global events on the stock market are key factors to watch.
