Markets Rally on Peace Hopes – Nasdaq up 1.16%
US equity markets pushed higher again in the latest session, extending the recent rally as optimism continued to build that the conflict in the Middle East may be approaching a resolution. The Dow Jones rose 0.48% to close at 46,565, while the S&P 500 gained 0.72% to finish at 6,575. The tech-heavy Nasdaqoutperformed, climbing 1.16% to settle at 21,840. In fixed income markets, US Treasury yields edged higher following stronger-than-expected ISM PMI data, which printed at its highest level since August 2022, highlighting ongoing resilience in the US economy. The 2-year yield rose 0.7 basis points to 3.800%, while the 10-year yield added 0.2 basis points to 4.319%. In currency markets, the US dollar remained under pressure, with the DXY falling 0.40% to 99.56 as traders continued to rotate into risk-sensitive assets amid improving sentiment. Commodity markets saw a divergence in performance. Oil prices moved lower as easing geopolitical tensions reduced supply concerns, with Brent falling 3.23% to $104.18 per barrel and WTI declining 2.12% to $99.35. In contrast, gold rallied strongly, gaining 1.94% to $4,758.57, supported by the weaker dollar and ongoing demand for defensive assets.
Oil Prices Falling on Peace Hopes
Oil prices moved lower yesterday as growing optimism around a potential de-escalation in the Middle East conflict weighed on energy markets. Sentiment shifted after U.S. President Donald Trump indicated that the United States could bring its conflict with Iran to an end relatively quickly. Comments suggesting the war could conclude shortly — even without a formal agreement — had already triggered a sharp sell-off in the previous session, with oil falling more than $3 a barrel. Markets are increasingly pricing in a shorter-lived disruption to global supply, with analysts noting that the U.S. is unlikely to allow the conflict to drag on into mid-May, when domestic gasoline demand typically peaks. However, while the prospect of a ceasefire is easing immediate supply concerns and dragging oil prices lower, traders are aware that a full recovery in energy flows through the Strait of Hormuz may take time, even if hostilities come to an end.
Geopolitics to Again Dominate in Trading today
Looking ahead, the macroeconomic calendar is relatively light today, however traders are not expecting a quiet day. The Asian session is set to open on the front foot after another positive day on Wall Street yesterday. President Trump is due to address the nation (and world) during the session though and that should provide plenty of volatility with any confirmation of the US pulling out of the Middle East likely to lead to more risk on moves. The London session will see an early focus on Swiss markets with the key CPI (exp +0.5%m/m) due out early in the day. It’s a quieter day in the New York session today, although there are more jobs numbers out with the usual US Weekly Unemployment Claims data release (exp 212k). We also hear from Fed members Logan and Bowman, but again traders are expecting moves to be dominated by updates on the conflict in the Middle East.
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