US Stocks Rally on Tech Optimism – Nasdaq up 1.3%
US equity markets moved higher overnight as investors returned to buying technology stocks despite the continued escalation of tensions in the Middle East. The Nasdaq led the gains, rising 1.29% to close at 25,837, while the S&P 500 added 0.89% to finish at 7,509. The Dow Jones also enjoyed a solid session, climbing 0.74% to end the day at 52,224.
The move higher in equities came despite renewed pressure in bond markets, with Treasury yields pushing higher on lingering inflation concerns. The US 2-year Treasury yield rose 5.5 basis points to 4.262%, while the benchmark 10-year yield increased 3.6 basis points to 4.628%, to hit a 2-month high. The stronger yield environment also helped underpin the US dollar, with the US Dollar Index gaining 0.25% to close at 101.20.
Oil prices continued their sharp advance as geopolitical risks intensified. Brent crude climbed 2.47% to settle at $91.42 per barrel, while WTI crude also gained 2.47% to finish at $84.52. The latest move higher followed reports that the conflict between the US and Iran had escalated further, while threats from Houthi forces in Yemen reportedly forced Saudi oil tankers to turn back in the Red Sea, increasing concerns over potential disruptions to global energy supplies.
Gold also benefited from the heightened geopolitical uncertainty, with investors once again seeking the safety of the precious metal. The yellow metal rallied 1.76% to close at $4,076.30 per ounce, recovering strongly from recent support levels as demand for safe-haven assets increased.
Yen Hits Fresh Lows Against the Dollar
The Japanese yen hit its lowest level against the dollar in decades in trading yesterday, and the trend looks set to continue into the rest of the year. It traded above the 163.00 level for the first time since December 1986 after breaking through the previous annual high of 162.82 to hit a new annual high of 163.23. It is sitting just below that level on the Asian open, and traders are expecting more records to be set as the day progresses. The Japanese authorities have been fighting an uphill battle against yen weakness for most of 2026, and despite several intervention attempts, the pair has continued to climb on the back of strong fundamentals. Although aware that there could be more ‘official action’ in the coming sessions, traders still feel the path for the pair is further north in the coming days and weeks.
Quiet Calendar Day Ahead – Geopolitics to Dominate
Attention now turns to a relatively quiet economic calendar, although geopolitical developments are expected to remain the primary driver of market sentiment. Traders will be watching the release of UK CPI data, with the market expecting a +2.7% print, down from last month’s +2.8% result, during the European session for further clues on the Bank of England’s policy outlook. There is little on the calendar in the New York session; however, traders will pay close attention to the US crude oil inventory report later in the day, where the market is expecting to see stockpiles drop by 2 million barrels.
