US Stocks Push Higher Again to Hit New Records – Dow up 0.45%
US equity markets continued their march higher overnight, with all three major indices once again closing at fresh record highs as investors balanced encouraging economic data and AI euphoria against ongoing uncertainty surrounding developments in the Middle East. The Dow Jones gained 0.45% to close at 51,307, while the S&P 500 rose 0.13% to 7,609, and the Nasdaq edged 0.03% higher to finish at 27,093.
The latest move higher in equities came despite a relatively cautious tone across broader financial markets. Investors were encouraged by stronger-than-expected US labour market data from the JOLTS Job Openings report, reinforcing expectations that the US economy remains resilient despite elevated interest rates and geopolitical uncertainty. However, with markets still awaiting greater clarity on the situation in the Gulf, conviction remained somewhat limited outside of equities.
Bond markets reflected this cautious outlook, with the US Treasury curve producing a mixed performance. The 2-year Treasury yield rose 1 basis point to 4.043%, suggesting traders continue to push back expectations for aggressive Federal Reserve easing, while the benchmark 10-year yield eased 1 basis point to 4.443%, indicating longer-term inflation and growth expectations remain relatively well anchored.
Currency markets were similarly subdued, with the US Dollar Index finishing little changed at 99.23. The lack of movement highlights the market’s current reluctance to establish large directional positions while geopolitical developments continue to dominate the macro landscape. Oil prices once again pushed higher within recent ranges, with Brent crude oil climbing 0.80% to $95.74 per barrel, while WTI crude advanced 1.74% to $93.76. Gold experienced another volatile trading session but ultimately finished close to unchanged, rising just 0.08% to $4,487.86 per ounce.
Oil Remains Big with the Strait Still Closed
Oil markets remained heavily influenced by events in the Middle East in the last few days, despite other markets looking for a silver lining in peace negotiations. Brent rose 0.80% to $95.74 per barrel, while WTI crude gained more, adding 1.74% to $93.76, as traders continued to monitor risks surrounding shipping flows through the Strait of Hormuz. Energy markets remain highly sensitive to any developments that could impact global supply chains, helping to maintain an elevated geopolitical risk premium in oil prices. More missile and drone strikes in the region, with both Kuwait and Bahrain reporting attacks from Iran, for many in the oil market, are pointing to a sustained conflict and continued closure of the Strait of Hormuz, which could see oil prices jump again in the next few sessions.
Geopolitics to Dominate, but Fundamentals Also to Feature
Attention now turns to a busy session ahead. Australian GDP figures (exp +0.5% q/q) will provide an important update on domestic economic momentum, while comments from Bank of Japan Governor Kazuo Ueda may offer further insight into the outlook for Japanese monetary policy and FX moves, especially while USDJPY is trading near 160. Later tonight, US ADP employment data (exp 118k) and the ISM Services PMI (exp 53.8) will be closely watched for indications on the strength of the US economy and the potential path of Federal Reserve policy. Nevertheless, geopolitical headlines are likely to remain the dominant driver of market sentiment and volatility in the near term.
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