US Stocks Rally on Conflict Resolution Hopes – S&P up 1%
US equity markets rallied strongly overnight as improving sentiment surrounding the conflict in the Middle East helped lift investor confidence and encouraged a return to risk assets. All three major indices finished the session firmly higher. The Dow Jones rose 0.83% to close at 49,946, while the S&P 500 gained 1.01% to finish at 6,699. Technology stocks led the advance, with the Nasdaq climbing 1.22% to end the day at 22,374. Currency markets saw the DXY pull back from recent annual highs, falling 0.68% to 99.81. In fixed income markets, US Treasuries moved higher, with yields declining across the curve. The 2-year yield dropped 4.5 basis points to 3.671%, while the benchmark 10-year yield fell 6.1 basis points to 4.216%. Oil prices fell sharply after reports that some shipping traffic has resumed moving through the Strait of Hormuz, easing immediate concerns about a prolonged disruption to global supply. Brent crude declined 2.35% to settle at $100.71 a barrel, while WTI crude dropped 4.61% to $94.16. Despite the move lower in prices, the conflict remains ongoing, with reports that Kharg Island was again targeted. Gold prices also edged slightly lower during the session, slipping 0.27% to $5,004.95.
Aussie Dollar in Focus for FX Traders Today
The Australian dollar has been the best-performing currency among the majors over the first quarter of 2026, and that looks set to continue from an interest rate differential perspective, with the Reserve Bank of Australia anticipated to raise rates by another 25 basis points today. Most other central banks—and we have another five major central bank rate calls this week—are expected to keep rates on hold in the short term while they assess the impact of the conflict in the Middle East, and this should add to the attraction of the Aussie dollar against its major peers. We have already seen some good breaks higher for the Aussie in the last few weeks, and a hike today, with signs of more to come, could see these moves increase even further in the coming weeks and months.
Geopolitics Remain in Focus, but a Central Bank Deluge Starts Today
Looking ahead, markets will continue to closely monitor geopolitical developments in the Middle East; however, attention is also likely to begin shifting back toward monetary policy as the next round of central bank meetings begins in earnest. Today’s key event will be the Reserve Bank of Australia’s interest rate decision, scheduled midway through the Asian session, where the bank is firmly expected to raise interest rates by another 25 basis points in light of recent strong jobs and inflation numbers. The rate call is followed an hour later by the press conference, which should give further clarity in terms of forward guidance. There is little on the calendar in the London session and just the Pending Home Sales numbers in the New York session, so again, updates out of the Gulf are expected to dominate market direction.
