US Stocks Hit Record Levels on Continued Peace Hopes – S&P up 0.26%
US equity markets posted modest gains overnight, with all three major indices closing higher as sentiment remained supported by ongoing optimism surrounding developments in the Middle East. The S&P 500 rose 0.26% to finish at 7,041, while the Nasdaq gained 0.36% to a fresh record close of 24,102. The Dow Jones lagged slightly but still edged up 0.24% to 48,578. In currency markets, the US dollar strengthened modestly, rising 0.17% to 98.22, although it continues to hover near recent lows. Meanwhile, US Treasury yields pushed higher, with the 2-year yield up 1.2 basis points to 3.773% and the 10-year yield climbing 2.8 basis points to 4.311%, reflecting a slight shift in rate expectations and ongoing resilience in economic data. Commodity markets were more active, with oil prices moving higher again as traders priced in the likelihood of extended negotiations in the Middle East. Brent crude rose 3.37% to $98.16, while WTI gained 3.72% to $94.69. Gold was little changed on the session, slipping 0.05% to $4,787.78, as slightly higher yields and a firmer dollar capped upside momentum.
Markets Poised at Pivotal Levels into the Weekend
Markets are poised at key levels going into the final trading day of the week today, with traders looking for confirmation of progress in the Middle East over the coming sessions and days before committing to bigger directional positions. Market confidence was underpinned yesterday by reports of a ceasefire agreement between Israel and Lebanon, alongside confirmation that the US and Iran are set to resume talks this weekend. However, some caution remains, with indications that a broader agreement could take up to six months to finalise. Key sticking points between the US and Iran will come into contention again over the weekend, and traders will be keenly observing the Strait of Hormuz for any signs that we could see a return to significant traffic levels in the short term. Signs that traffic is increasing should see oil prices pull back and sentiment rise, whereas if traffic remains at low levels for a longer period of time, expect sentiment to sour and oil to rise further. Several key financial products are now trading at key technical levels, including major US indices, gold, AUDUSD, EURUSD, and USDJPY, and all could see significant moves if we see a step in either direction.
Quiet Calendar Day into the Weekend
Looking ahead, the macroeconomic calendar is very quiet on the final trading day of the week, once again leaving geopolitical developments in the Gulf region as the primary driver of market sentiment into the weekend. We have heard updates from President Trump already today which have appeared optimistic; however, markets are now craving certainty, and traders will be keeping a wary eye on newswires as we move through the sessions today. There is very little on the calendar for the first two sessions of the day today, and although we do hear from some big central banker names later in the day, including the MPC’s Huw Pill and Fed members Mary Daly, Thomas Barkin, and Christopher Waller, geopolitics is set to drive markets into the weekend.
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