Mixed Day for Markets to Close out the Week – Nasdaq up 0.9%
US markets delivered a mixed finish to end the week, as investors continued to digest an ongoing stream of macroeconomic, central bank, and geopolitical developments. The tech sector remained a key driver of performance, with the Nasdaq climbing 0.89% to 25,114, while the S&P 500 added 0.29% to close at 7,230. In contrast, the Dow Jones underperformed, slipping 0.31% to 49,499. In FX markets, the US dollar edged modestly higher, with the Dollar Index up 0.16% to 98.21, stabilising after the prior session’s sharp, intervention-led weakness. Treasury markets were relatively subdued, with the 2-year yield ticking up 0.9 basis points to 3.877%, while the 10-year yield was little changed, easing slightly by 0.1 basis points to 4.370%. Commodities saw some retracement, particularly in energy markets. Brent crude fell 2.02% to $108.17, while WTI declined 2.98% to $101.91, as optimism surrounding a potential easing of tensions in the Middle East weighed on prices. Gold was largely unchanged on the session, slipping just 0.08% to $4,614.21.
Big Moves Ahead for Oil Today
It’s not exactly a tough call to make given the moves we have seen in oil over the past few weeks, but the latest update from President Trump over the weekend really could see oil prices move 10%+ in either direction, depending on how the situation in the Strait of Hormuz plays out. The update lacked details, but a commitment to assist countries in moving their ships through the blockaded strait could test the current ceasefire in the Middle East in the coming sessions. If we see the start of traffic increase under US protection, then we should see oil prices fall—and fall hard. However, if the Iranians look to oppose this move and strike at those tankers or the US Navy, then we could see full military operations resume in short order, which would lead to a sharp move north for oil prices and probably a swift challenge of recent highs. Noting that President Trump has received Iran’s latest proposal over the weekend and has advised that he feels it is not acceptable could see some skewing of options towards topside moves.
Geopolitics to Dominate First Trading Day of the Week
Looking ahead, market conditions are expected to be quieter in terms of liquidity, with Japan, China, and the UK all observing public holidays today. Despite a relatively light economic calendar, geopolitical developments remain firmly in focus. Reports that President Trump has indicated the US will begin facilitating traffic through the Strait of Hormuz today are likely to keep markets sensitive to incoming headlines, particularly in oil markets. In terms of scheduled events, the only notable release comes in the US session, with Bank of Canada Governor Tiff Macklem set to speak towards the end of the day when he testifies before the House of Commons Standing Committee on Finance in Ottawa, which could see some moves in the loonie.
