Tech Stocks Hit New Records on Peace Hopes – Nasdaq up 1.6%
US equity markets pushed higher overnight, led by the tech sector, as both the S&P 500, up 0.80% to 7,022, and the Nasdaq, up 1.59% to 24,016, closed at fresh record highs. The Dow Jones underperformed slightly, slipping 0.15% to finish at 48,463, as broader market sentiment remained supported by improving peace prospects in the Gulf and a continued run of solid corporate earnings. Outside of equities, price action was more subdued. The US dollar index was little changed on the session, with the DXY edging 0.03% lower to 98.07, while Treasury yields moved higher across the curve, with the 2-year rising 1.6 basis points to 3.761% and the 10-year adding 3.6 basis points to 4.283%, reflecting a degree of underlying caution despite the positive tone in risk assets. In commodities, oil markets stabilised after recent volatility, with Brent crude inching up 0.15% to $94.93 a barrel and WTI crude gaining 0.14% to $91.41, with traders remaining highly sensitive to geopolitical headlines. Gold moved in the opposite direction, falling 1.05% to $4,791.04 as it pulled back from recent highs.
Aussie Soars as Risk Returns to the Market
The Aussie dollar has experienced strong moves on the back of recent positive news with regard to peace in the Middle East and is now threatening to break through to new highs for the year against the dollar and on the crosses. Overnight, it powered to levels not seen since the early 1990s against the yen and is threatening to hit stronger levels against the other majors in the coming sessions. The risk, of course, at the moment is that we see a sharp reversal in updates on the situation in the Gulf and a resumption of hostilities, and that is likely to lead to a hard hit for the currency. Also, we have key employment data due out in the Asian session today, but if that comes in near expectations and sentiment remains positive, then expect further topside potential for the Aussie.
Data to Compete with Geopolitics for Impact Today
Looking ahead, markets are likely to remain headline-driven from a geopolitical standpoint; however, focus will also shift toward key economic data releases across all three major sessions today. In the Asian session, there is big data due out of Australia, with Employment Change (exp +191k) and the Unemployment Rate (exp 4.3%) due out early in the session. The London session will see an early focus on UK markets, with GDP (exp +0.1% m/m) data due out alongside a raft of other economic indicators. In the US session, attention will turn to the Philly Fed Manufacturing Index (exp 10.3) and the usual Weekly Unemployment Claims (exp 213k) due out early in the day, but again, investors are expecting geopolitical updates to dominate sentiment, with continued positive news likely to see more risk-on across the board.
