US Markets Mixed as Investors Assess Geopolitical Updates – Nasdaq up 0.36%
US equity markets finished mixed on Tuesday as investors assessed the latest geopolitical developments, including further positive news from the Gulf, while attention also began to turn towards the US-China summit later in the week. Technology stocks continued to outperform, with strong demand for AI-related names helping the Nasdaq gain 0.45% to another record close of 27,244. The Dow Jones slipped 0.36% to 51,863, while the S&P 500 finished unchanged at 7,764.
US Treasury yields continued to edge higher as markets remained focused on the implications of the Federal Reserve’s latest policy update, despite improving sentiment surrounding developments in the Middle East. The policy-sensitive 2-year Treasury yield rose 0.8 basis points to 4.754%, while the benchmark 10-year yield gained 1.0 basis point to 4.961%, keeping it within touching distance of the key 5% level.
The US dollar also strengthened against the major currencies during another choppy trading session. The Dollar Index gained 0.13% to close at 100.55 as higher Treasury yields continued to provide underlying support for the greenback.
Oil prices extended their recent decline as concerns surrounding global supply continued to ease. Brent crude fell 1.87% to $98.46 per barrel, closing back below the $100 level, while WTI declined 1.24% to $94.59. The latest moves continue the sharp reversal in energy markets as traders reduce some of the geopolitical risk premium that had been built into prices.
Gold experienced another volatile session but ultimately finished higher despite gains in both the US dollar and Treasury yields. The precious metal rose 0.41% to close at $4,360.87, although recent price action continues to highlight the competing influences of geopolitical developments and moves in US rates and the dollar.
Market Focus on Pending US-China Summit
The upcoming meeting between US President Donald Trump and Chinese President Xi Jinping has the potential to be a significant market-moving event, with trade, tariffs and the Middle East conflict expected to feature prominently. The immediate focus will be on whether the two sides can extend the existing trade truce, which is currently due to expire in November.
A constructive outcome would likely be positive for global risk sentiment, supporting equities and trade-sensitive currencies while potentially reducing demand for the US dollar as a safe haven. Conversely, renewed tariff threats or disagreement over technology and critical minerals could quickly pressure stocks and increase volatility.
The Middle East will also be important. Washington is expected to push Beijing to use its considerable economic influence over Iran to help de-escalate the conflict. China remains Iran’s largest oil customer, and recent headlines did suggest that China was prepared to use its leverage with Iran to assist in the region.
Any indication that China could assist in negotiations would be particularly significant for energy markets. Progress towards peace could see oil prices fall sharply, easing global inflation concerns and potentially supporting equities and bonds. With markets already sensitive to geopolitical headlines, the summit could generate substantial volatility across oil, stocks, currencies and gold.
Geopolitics Likely to Dominate Data in Trading Today
The economic calendar does pick up today, with Flash Services and Manufacturing PMI releases due from France, Germany, the UK and the US, as well as other jurisdictions. The figures should provide markets with a fresh indication of economic momentum across the major economies and could generate volatility in currencies and rates if results deviate significantly from expectations. US crude oil inventory data will also be closely monitored following the latest decline in energy prices.
However, traders still expect market sentiment to remain dominated by geopolitical updates on the Middle East as meetings continue in the US, with the upcoming US-China summit moving swiftly to the front of mind for many investors.
