US equities shrug off Middle East flare‑up as 22 April deadline looms

Markets look past Middle East escalation, for now

United States (US) equity markets surged on Friday, with the S&P 500 and the Nasdaq 100 pushing to fresh record highs, while crude oil finished significantly lower after Iran’s foreign minister declared the Strait of Hormuz completely open for commercial vessels during the Lebanon ceasefire.

However, shortly after markets closed for the weekend, and following a brief flurry of traffic through the Strait of Hormuz, the Islamic Revolutionary Guard Corps (IRGC) announced it was re‑closing the vital waterway as long as the US naval blockade remains in place, reportedly firing on at least two tankers in the process.

Since then, reports have surfaced that the US seized an Iranian cargo ship attempting to breach the blockade, prompting Tehran to vow retaliation. This development has cast fresh doubt over whether the fragile ceasefire, set to last just two more days, will hold at all, placing a heavy shadow over peace talks scheduled to be held in Pakistan early this week.

Against this tense backdrop, West Texas Intermediate (WTI) crude oil futures are trading 4.24% higher at $87.52 a barrel, while Nasdaq futures are trading just 0.50% lower at 26,692 during Asian trading.

These relatively modest moves at the start of what appears to be a critical week highlight a sense of Middle East headline fatigue among traders. Markets are, as we noted last week, forward‑looking by nature and increasingly expect the deadline to be extended once again, while peace talks and diplomatic pressure continue behind the scenes to break the stalemate.

Geopolitics dominates as earnings and data take a back seat

Looking ahead, all eyes this week will remain on headlines from the Middle East ahead of the expiry of the 22 April ceasefire. Away from geopolitical developments, the US corporate earnings season rolls on, featuring reports from 3M, GE, Tesla, IBM, Boeing, Intel, Procter & Gamble, United Airlines and many more.

On the economic front, the main points of interest will be US retail sales figures for March and the April flash purchasing managers' index (PMI) discussed below.

S&P Global Flash PMI

Date: Thursday, 23 April at 11.45pm AEST

For March, the S&P Global US composite flash PMI slipped to 50.3, its lowest level in nearly a year. The details revealed a clear divergence between sectors. The services PMI fell to 49.8, slipping into contraction territory for the first time in three years. Firms cited the weakest growth in new business since April 2024, partly attributed to tariffs and the ongoing conflict in the Middle East.

In contrast, the manufacturing PMI rose to 52.3, marking an eighth consecutive month of expansion. Stronger output and new orders were supported by businesses stockpiling supplies and locking in prices amid the Middle East conflict.

The April flash figures will offer an early snapshot of how the US economy is navigating ongoing geopolitical uncertainty, elevated oil prices and shifting trade dynamics.

Consensus expectations point to a modest rise in the composite measure. However, any further slowdown, especially in services, could heighten concerns about stagflation risks and complicate the Federal Reserve (Fed) policy balancing act. Stronger‑than‑expected readings, by contrast, would support risk sentiment and reinforce the view of an incredibly resilient US economy.

The US interest rate market starts the week pricing in 16 basis points (bp) of Fed rate cuts for this year.

US Composite PMI chart

Nasdaq 100 technical analysis

The Nasdaq 100 began a correction after hitting its late‑October record high of 26,182, eventually bottoming at the recent low of 22,841. At no point did the pullback appear to be anything other than a healthy technical correction following its strong rally from the Liberation Day lows last April.

Last week’s push to record highs fulfilled our minimum upside objective, and we note that the rally has extended into overbought territory, which warns that a period of consolidation may not be far away.

For those with a longer‑term horizon who are comfortable with periods of consolidation, there is no reason the current rally cannot mirror the powerful move seen after the Liberation Day lows and push on to 27,500 before potentially reaching 30,000 by year end.

Nasdaq 100 daily candlestick chart

Dow Jones technical analysis

In our Wall Street updates during March, we noted that the Dow Jones had formed a classic head‑and‑shoulders topping pattern at the 50,512 high of mid‑February, with the neckline sitting around the 48,500 - 48,400 zone.

The decisive daily close below that neckline in early March triggered a sharp slide. The index reached our projected target of 46,500 in mid‑March before taking another leg lower to the late‑March low of 45,063.

The bounce since then has been impressive, with the index surging 10% from the March low into Friday night’s 49,717 high, bringing it within just 795 points, or 1.6%, of its all‑time record.

As long as the Dow Jones can hold above the 48,500 – 48,400 support zone, the very level it broke below in early March, the correction likely bottomed at the late‑March low of 45,063. This sets the stage for a retest of the 50,512 high and potentially a further push towards 52,000.

Dow Jones daily candlestick chart

• _{Source: TradingView. The figures stated are as of 20 April 2026. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}