Tech Markets Rally Despite War Concerns – Nasdaq up 1.3%
US equity markets finished higher overnight, with technology stocks once again leading the advance as renewed optimism surrounding semiconductor companies helped offset ongoing concerns surrounding the conflict in the Middle East. The Nasdaq outperformed, rising 1.30% to close at 26,206, while the broader S&P 500 gained 0.81% to finish at 7,543. The Dow Jones Industrial Average also moved higher, adding 0.27% to close at 52,487.
In fixed income markets, US Treasury yields eased as investors continued to monitor geopolitical developments and assess the outlook for monetary policy. The US 2-year Treasury yield declined 4.2 basis points to 4.177%, while the benchmark 10-year yield fell 2.8 basis points to 4.551%. The softer yield environment saw the US Dollar Index edge 0.05% lower to 100.94.
Commodity markets were mixed overnight. Oil prices retreated following two consecutive sessions of strong gains as traders evaluated the latest developments in the Middle East and the potential impact on global energy supplies. Brent crude fell 2.54% to settle at $76.01 per barrel, while West Texas Intermediate declined 2.37% to $71.78 per barrel. Gold moved higher, benefiting from the softer US dollar, climbing 1.14% to finish at $4,122.84 per ounce.
Glass Still Half Full for Investors Despite Action in the Middle East
Global financial markets were resilient once again in trading yesterday despite missile and drone strikes from both the US and Iran increasing in volume in the Middle East, with all three of the major US indices finishing up. This has been a familiar playbook over the last few months, with investors largely happy to shrug off war concerns and drive markets higher. It could be a very interesting day ahead, though, as investors will be aware of substantial event risk over the weekend from the conflict in the Gulf, so we may see a bit of a pullback in risk trades as some profit-taking flows hit the market later in the day. In general, though, it does look like last night’s price action is indicative of overall positive sentiment resonating around the market, so unless we see a dramatic increase in hostilities – or maybe a closing of the Strait again – then a buy-on-dips mentality seems to be working well.
Quiet Calendar Day to Close Out Trading Week
It is a quiet calendar day ahead to close out another eventful trading week. There is little of note scheduled in the Asian and European sessions today; however, Canadian markets will be in focus early in the New York session, with both Employment Change and the Unemployment Rate scheduled for release. These will be closely watched after last month’s surprise upside result, which saw the Unemployment Rate fall from a lofty 6.9% after 88k jobs were added in May. This month’s numbers are expected to show a more modest 11k increase in employment, with the Unemployment Rate remaining steady at 6.6%, but traders are still expecting plenty of volatility in the loony around the event. With a relatively quiet economic calendar elsewhere, markets are likely to remain highly sensitive to any further geopolitical developments from the Middle East, which continue to be the primary driver of investor sentiment across global financial markets.
Explore all upcoming market events in the Economic Calendar.
