Stocks Still Finding the Will to Push Higher

Stocks keep finding the will to push higher, with the S&P 500, Nasdaq, and Dow all hitting fresh record highs, while the Nikkei in Asia joined the party today. It’s an impressive show of resilience. Despite President Trump’s messaging being all over the map this week on the US-Iran negotiations - at times notably cavalier, openly saying he 'couldn’t care less' if talks collapse, while posting upbeat messages on Truth Social claiming discussions are still alive - risk assets continue to take a glass-half-full approach.

A peace agreement is far from a fait accompli at this stage, yet the market seems determined to give diplomacy the benefit of the doubt, at least as long as tech sector enthusiasm continues to provide a powerful counterbalance.

Oil has been on the rise this week as Iran talks tough once again, reviving threats to tighten the blockade not just on the Strait of Hormuz but also on the Bab-el-Mandeb Strait. This has injected a fresh dose of risk premium into crude prices. The longer the uncertainty drags on, the more real the threat becomes to global energy flows. US crude oil inventories data will be watched closely in the coming days to see if America is also beginning to draw down stockpiles in the same way other nations have been forced to do amid the conflict.

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In FX markets, higher oil is providing fresh support to the US Dollar now that the next move from the Fed looks more likely to be a hike rather than a cut. The Dollar Index (DXY) is digging its heels in above the 99 level. Even as the latest Eurozone inflation data pointed to a likely ECB rate hike this month, the greenback remains resilient. Meanwhile, USDJPY is hovering on the doorstep of the 160 level - a zone that has previously prompted Japanese monetary authorities to step in and support the yen.

Gold has come under pressure again, falling back as the combination of high oil, a firmer US Dollar, and elevated Treasury yields weighs on the precious metal. The spot price has slipped below $4,500 today. Despite the geopolitical backdrop, gold is struggling to play its traditional safe-haven role while inflation concerns and rising real yields dominate the narrative. A genuine peace deal that leads to meaningfully lower oil and a softer Dollar remains gold’s best hope for a convincing upside break. In the meantime, the uncertain inflation and interest rate outlook continues to keep a lid on larger gains. Levels to watch in the near-term include support at $4450 and $4420, with resistance at $4540 and $4580.

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