Tech lifts some Asian-Pacific indices

US stock index futures came under concerted selling pressure in early trade yesterday. This was enough to take both the S&P 500 and Dow Jones contracts down to their lowest points for the week.  But all the majors subsequently recovered from their lows as the session progressed and then shot higher soon after the US open.

The catalyst for the rally was a report from Axios saying that the US and Iran had reached a deal which would include an extension to the current ceasefire. All it now required was President Trump’s approval. Quite what an extension to a ceasefire means when it was already ‘extended indefinitely’ back on 21st April is anyone’s guess.

But in fairness, it was conditional on Iran making ‘progress’ in talks, so perhaps that’s what we’ve got. The most immediate concern for investors is unblocking the Strait of Hormuz. So, they will respond positively to any suggestion that ‘progress’ is being made in this regard.

All the US majors ended yesterday’s session in positive territory, with the NASDAQ. S&P 500 and Russell 2000 closing at fresh record highs.

Source: TN Trader

Tech was a major contributor to the positive session, and many chip stocks have continued to rally this morning.  Dell has helped to keep sentiment buoyant. It released results after the close, which beat expectations, and it also provided a strong revenue forecast. The stock was up 38% this morning.

Yesterday, Snowflake did something similar when it jumped around 36% following better-than-expected earnings and revenues, along with strong forward guidance.

Going into the weekend, investors appear quite sanguine over the ongoing war between the US and Iran, convinced that it will soon be over. The only question will be: has the war made the situation better or worse for the world overall? Aside from this, AI-adjacent tech continues at the vanguard of the current rally off the March lows.

There’s no sign of exhaustion currently, and all the major US indices are trading well above significant support. But the higher these markets go, the thinner the atmosphere.

European stock indices were firmer across the board on Friday as investors assessed the latest developments in the Middle East. Yesterday afternoon, Axios reported that the US and Iran had largely agreed on a framework for a temporary ceasefire extension. While that didn’t sound much like progress given the current ‘indefinite’ ceasefire, crucially, the proposal would set up conditions to allow unrestricted commercial traffic through the Strait of Hormuz.

Source: TN Trader

It is also thought that it could provide a framework for future negotiations on Tehran’s nuclear programme. Despite this, US Vice President JD Vance cautioned that negotiations are not yet complete and President Trump has to approve the proposed terms.

The US dollar fell sharply yesterday afternoon following reports of progress being made in talks between the US and Iran to end the war. The dollar had already pulled back from the intra-day highs hit during the Asian Pacific session. But the selling accelerated as investors dumped the dollar and pushed the proceeds back into riskier assets.

Reports that Washington and Tehran had agreed to a draft 60-day ceasefire extension weighed on the dollar, particularly as the news contributed to softer oil prices and reduced inflation fears.

Yesterday's US economic data was a bit of a mixed bag. PCE data, which includes what used to be the Fed’s preferred inflation measure, Core PCE, showed the month-on-month data softening a bit. Meanwhile, year-on-year Core PCE came out in line with market expectations, but it was still its highest reading since October 2023.

First-quarter GDP was revised down. But Durable Goods were stronger than anticipated. Overall, the data was enough to decrease the likelihood of a rate hike from the Federal Reserve this year. The cash Dollar Index was trading today near the bottom of a trading range which has now been building for a fortnight.

The Japanese Yen weakened slightly against the US Dollar after softer-than-expected inflation data from Tokyo complicated expectations surrounding future Bank of Japan policy tightening. On the other hand, better-than-expected Industrial Production, Retail Sales and Unemployment data only make the BOJ’s decision next month harder to calculate.

Source: TN Trader

Gold went on quite a journey yesterday. Early in the session, it sliced through support at $4,400 to hit a four-week low under $4,370. At that stage, it looked as if the break of support would encourage further selling. But gold managed a tentative recovery, possibly helped by a modest pullback in the US dollar. This helped it to push back above $4,400, and from there it just soared.

By late afternoon, it was trading above $4,500, and it has managed to hold above here so far today. Sentiment concerning a possible breakthrough in US/Iranian negotiations to end the war has improved. This led to a selloff in the US dollar, which has helped support the price of gold. This move was also reinforced by US data, which reduced the probability of a US rate hike this year.

Source: TN Trader

Investors must now position themselves ahead of the weekend, unsure if developments will be positive or negative. But either way, gold’s rebound after breaking key support so easily must give some encouragement to the bulls.

Silver was little changed in early trade on Friday. Yet it also put in a strong recovery after breaking down to a four-week low early in yesterday’s session. Silver broke below $72 per ounce. But then the buyers came back in to push silver above $76 in the early hours of this morning.

It was unable to hold above here, and it now looks as if $76 marks an area of resistance. Investors continue to monitor for any developments concerning US/Iranian negotiations, along with any shift in expectations concerning the Federal Reserve and US monetary policy.

Source: TN Trader

Crude oil prices fell further on Friday after selling off throughout yesterday. The latest retreat in crude oil came on revised optimism that an extension to the existing ceasefire between the US and Iran would be announced, giving both sides more time to agree on terms.

But this comes against a background of increased tensions this week as it appears both the US and Iran could be accused of breaking the original, and somewhat fragile, ceasefire agreed back in April – the one that had already been extended indefinitely. Only it’s possible that this time Iran has come up with a viable counteroffer to the Trump administration’s, which could form the basis for further negotiations.

Meanwhile, a look at the charts shows that both Brent and WTI have made a series of lower highs and lower lows over the past week, something that suggests that upside momentum may be fading. Of course, the key to any negotiation will be reopening the Strait of Hormuz.

Source: TN Trader

The US will want this on the terms that existed before the war; Tehran looks likely to insist that shipping should pay a fee for being ‘assisted’ through the Strait. One way or another, the potential reopening of the waterway would significantly ease supply concerns after months of disruption that have removed millions of barrels of oil from global markets. But restoring normal oil flows could take months.

Mines in the Strait would need to be cleared, damaged infrastructure repaired, and production gradually brought back online. Meanwhile, the discussion will turn to what happens to Iran’s enriched uranium.

Investors once again go into a weekend balancing optimism surrounding a potential US-Iran agreement against the reality that geopolitical tensions remain elevated and highly unpredictable. Investors must continue to monitor developments surrounding the proposed 60-day ceasefire extension, shipping access through the Strait of Hormuz and negotiations over Iran’s nuclear programme.

Attention will also turn toward key US economic data next week, including ISM PMI figures and Non-Farm Payrolls, which could influence expectations around Federal Reserve policy. Technology and AI-related stocks remain the dominant force driving equity market momentum, while commodities and currencies are likely to remain highly sensitive to headlines from the Middle East.

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