Global stocks hovered near record peaks yesterday as international tensions simmered, and the dollar held near a six-week high as traders trimmed bets on Federal Reserve interest rate cuts.
Safe-haven gold was little changed, while oil prices rebounded from an earlier retreat after US President Donald Trump adopted a wait-and-see attitude towards Iran, having earlier threatened intervention. International politics has been the major focus for markets since the start of the year following Trump’s action in Venezuela, threats to take over Greenland and tensions in the Middle East.
“Although it appears that we’ve sort of dialled down the probability of US intervention in the Middle East for the time being, I don’t think we can entirely rule that out,” Michael Brown, senior research strategist at Pepperstone, said.
Market participants may lack conviction ahead of the Martin Luther King Jr Day US holiday on Monday, Brown said.
“I wouldn’t be entirely confident if I was running a book to be long-risk or short-crude into a three-day weekend with this amount of Middle East tension going on,” he said. The pan-European Stoxx 600 index was 0.1 per cent lower, after notching a record high on Thursday. The index was on track to end the fifth consecutive week in positive territory, bringing gains made at the end of 2025 into the new year. France’s CAC 40 was 0.7pc lower, underperforming regional peers on political uncertainty. The French government yesterday postponed talks about its 2026 budget as legislators failed to reach a compromise.
US stock futures pointed to a firm start on Wall Street, where an earnings-packed week will end with State Street results. In Asia, tech-heavy indexes in Taiwan and South Korea notched all-time peaks as stellar results from Taiwanese chipmaker TSMC revived the AI trade. The US and Taiwan clinched a trade deal on Thursday that cuts tariffs on many of the semiconductor powerhouse’s exports, directs investments towards the US technology industry and risks infuriating China.
“I guess with the TSMC report yesterday being pretty solid and sounding optimistic, it certainly provided a much-needed shot in the arm for those AI names which have been struggling on Wall Street in recent months,” Tony Sycamore, a market analyst at IG, said.
In the US, premarket trading showed that semiconductor shares were on track to extend their AI-fueled rally, as the likes of Intel and Nvidia edged up.
The yen grabbed the spotlight in the currency markets after Japanese Finance Minister Satsuki Katayama said yesterday Tokyo would not rule out any options to counter excessive foreign exchange volatility, including co-ordinated intervention with the US.
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