US Stocks Remain Under Pressure – Dow down 0.6%
US financial markets closed lower overnight as investors continued to navigate an increasingly uncertain geopolitical backdrop while awaiting another round of key corporate earnings. Sentiment remained subdued throughout the session as markets digested reports of further military action in the Middle East, with President Trump announcing additional US strikes against Iran and the Houthis declaring a naval blockade targeting Saudi shipping. The escalation saw investors remain cautious, with the Dow Jones falling 0.59% to 51,839, while the S&P 500 slipped 0.19% to 7,443. The technology-heavy Nasdaq again outperformed the broader market, edging just 0.05% lower to finish at 25,508.
The geopolitical uncertainty also weighed on bond markets, with US Treasury yields moving higher across the curve as investors reassessed inflation and growth risks stemming from higher energy prices. The two-year Treasury yield rose 3.0 basis points to 4.206%, while the benchmark 10-year yield increased 4.4 basis points to 4.592%.
The US dollar strengthened against the major currencies, with the US Dollar Index rising 0.21% to 100.97 as investors sought the relative safety of the greenback. The Canadian dollar was one of the currencies in focus after the United States announced fresh 50% tariffs on selected Canadian imports late in the session, adding another layer of uncertainty to North American trade.
Oil prices continued to edge higher as markets monitored the latest developments in the Gulf, although gains remained relatively modest given the significant geopolitical headlines. Brent crude rose 0.98% to settle at $88.96 per barrel, while WTI crude gained 0.64% to close at $83.02. Gold, meanwhile, was unable to attract sustained safe-haven demand, easing 0.24% to $4,006.99 an ounce to remain near its lowest level of the year.
Pound in Focus this Week
The British pound is strongly in focus this week as both fundamental and geopolitical factors look to combine to add volatility to the currency. It is a data-heavy week for sterling, with three major statistical updates due, while on the geopolitical front, the country welcomed a new Prime Minister. The currency has already seen some pressure early in the week after Andy Burnham advised that he would be sticking with the previous government’s fiscal rules while also announcing John Healey as the new Chancellor of the Exchequer. However, traders are expecting to see greater impact in the short term from key employment data, due out tonight, followed by CPI numbers in the Wednesday session and Retail Sales numbers on the final trading day of the week, Friday.
Middle East Remains in Focus for Traders Today
Attention now turns to today’s economic calendar. We have already seen key New Zealand inflation data released early in the Asian session, with the 1.5% print coming in slightly above the expected 1.4% for the quarterly number, giving a slight boost to the Kiwi dollar. There is little else on the schedule in the Asian session, but focus will move to UK markets shortly after the London session opens, with key employment data due. The Claimant Count number is expected to show another 29k claims last month, while the Unemployment Rate is expected to remain steady at 4.9%. Both numbers should offer fresh insight into the strength of the UK labour market and potential implications for Bank of England policy. There is little on the calendar in terms of Tier 1 data for the rest of the trading day, and markets are expecting updates from the conflict in the Middle East to again exert significant influence across all financial products.
Explore all upcoming market events in the Economic Calendar.
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