Market Overview
Oil prices recorded steep losses overnight, driven by growing prospects for diplomatic de-escalation between the U.S. and Iran, coupled with reports of renewed supply from Saudi Arabia. This provided a significant tailwind for global equities, particularly the technology sector, which propelled the Nasdaq Composite to a new record close. In contrast, the S&P 500 closed flat, while the Dow Jones Industrial Average finished lower. Australian shares are anticipated to open modestly higher, with investors also looking ahead to a key summit between U.S. President Donald Trump and Chinese leader Xi Jinping later this week, where topics like AI safety, the Iran conflict, tariffs, and rare earth metals are expected to be discussed. Treasury Secretary Scott Bessent met Chinese Vice Premier He Lifeng prior to Xi’s visit to the U.S.
Markets
US equities displayed a mixed performance. The Nasdaq Composite (^IXIC) soared to a record 27,244.28, gaining 0.45%. The S&P 500 (^GSPC) closed flat at 7,764.64, while the Dow Jones Industrial Average (^DJI) ended the day at 51,863.69, down 0.36%.
Commodity markets saw notable moves, primarily in oil. Brent Crude (BZ=F) settled at $98.65 a barrel, down 1.68%, and WTI Crude (CL=F) settled at $89.85 a barrel, falling 6.19%. Gold (GC=F) rebounded, closing at $4,396.20 an ounce, up 0.28%.
In currency markets, the Australian Dollar (AUDUSD=X) was trading at $0.7119, down 0.03%.
US Treasury yields, with the 10-Year Treasury (^TNX) at 4.968%, up 0.50 bp.
Looking to the APAC session, ASX 200 Futures were pointing up 20 points, or 0.2%, suggesting a positive open for Australian shares. The ASX 200 (^AXJO) closed the prior session at 8,731.90, up 0.01%.
What Drove Markets
Oil prices recorded their fifth consecutive day of losses amid hopes for a diplomatic resolution between the U.S. and Iran. President Trump announced that U.S. officials had a very good meeting with Iran’s delegation at the UN General Assembly, which lasted about three hours. He also stated he faced a big decision on whether to pursue a deal with Iran or to annihilate the country. Trump furthermore conveyed his belief that a deal would be made right after the upcoming U.S. midterm elections, noting that it did not make sense for them not to, and adding that they were waiting to see how he performed in the midterm election. Iran reportedly offered to reopen the Strait of Hormuz within seven days in exchange for a U.S. military de-escalation and an end to its blockade on Iranian ports. Concurrently, Saudi Arabia is reportedly planning to restart its East-West pipeline as early as this week, aiming to restore significant flows by Saturday. The kingdom has already taken steps to offset lost capacity, including ramping up east coast exports, with Kpler shipping data indicating that six very large crude carriers loaded nearly 12 million barrels of oil at eastern Saudi ports on Monday.
The Nasdaq Composite’s fresh all-time record was propelled by a strong rebound in technology stocks, particularly within the artificial intelligence (AI) sector. Analyst commentary from Wolfe Research indicated that tech remains their favorite sector, with strategist Chris Senyek noting they prefer growth over value and expect “momentum stocks like semiconductors, hardware, and memory” to regain leadership into year-end. This strength was attributed to enthusiasm around Meta Platforms’ new AI model, Muse, which is currently the top free app on the Apple App Store and has spurred a viral #MuseMoneyChallenge, as well as Anthropic’s unveiling of a more cost-efficient AI model.
While the Nasdaq surged, the broader U.S. equity market showed mixed performance, with the S&P 500 finishing effectively flat and the Dow Jones Industrial Average posting modest losses. A selloff in financial stocks contributed to the Dow’s decline.
In fixed income, Treasury yields pulled back, with the 10-year yield trading below 5%. Despite the Federal Reserve restarting its rate hiking cycle last week, Tom Garretson, a senior portfolio strategist at RBC Wealth Management, warned of market complacency regarding the idea that the 10-year yield could move above 5%. He also suggested there is a “pretty persistent risk” that the Fed could raise rates at least two more times, potentially pushing rates towards 5% into early 2027. Separately, Bank of Canada Governor Macklem warned that future rate decisions would need to balance slow growth against high energy costs.
Stocks to Watch
- Sandisk (SNDK) closed up 6.82% to 1,887.04, contributing significantly to the Nasdaq’s rise following bullish analyst calls.
- Micron (MU), a heavyweight chipmaker, increased 5.00% to 1,096.16, lifting the Nasdaq.
- Intel (INTC) gained 1.71% to 123.86, while AMD (AMD) rose 1.34% to 623.77, with both companies making central processing units crucial for AI agents.
- Nvidia (NVDA) also contributed to Nasdaq gains, closing up 0.66% to 228.87.
- Meta Platforms (META), despite closing down 0.63% to 736.59, saw its new AI model, Muse, act as a key catalyst for the broader AI trade.
- JPMorgan (JPM) declined 3.42% to 340.00, explicitly cited as weighing on the Dow amid a selloff in bank shares.