Global markets edge higher as Middle East tensions ease​

​​​Asian markets and US stocks rally on reduced conflict fears

​Asian equity markets opened higher as investors welcomed signs of reduced Middle Eastern tensions. The MSCI Asia Pacific Index posted modest gains, with Japanese and South Korean markets leading the advance across the region.

​Chinese markets also participated in the rally, despite ongoing concerns about domestic economic growth. Hong Kong's Hang Seng Index managed to eke out gains as investors focused on reduced energy supply disruption risks.

​Wall Street posted sharp gains with the S&P 500 approaching record highs while the Nasdaq 100 achieved a new all-time peak. The rally was broad-based with advancing stocks significantly outnumbering decliners.

​Technology and airline sectors led the rally as investors celebrated the reduced likelihood of wider conflict. Market breadth was positive, suggesting the rally had solid foundations beyond just geopolitical relief.

​Dollar weakens as oil prices stabilise

​The US dollar continued its decline against major currencies, hovering near four-year lows against the euro. This weakness reflected changing expectations about Federal Reserve (Fed) monetary policy and reduced safe-haven demand from investors.

​US two-year Treasury yields fell to a six-week low as investors reassessed inflation risks following lower oil prices. The drop in yields came as energy costs declined, reducing concerns about energy-driven inflation pressures.

​Crude oil prices found stability after significant recent declines, with both Brent crude oil and WTI recovering modestly from multi-week lows. Oil trading activity remained elevated as markets adjusted to reduced geopolitical risk premiums.

​Technology leads sector rotation

​Technology stocks outperformed as investors rotated back into growth names following the easing of geopolitical tensions. Broadcom hit a record high following an analyst upgrade, while other semiconductor companies also posted solid gains.

​Airline stocks surged on reduced concerns about flight disruptions and fuel costs. The sector's performance reflected optimism about travel demand and operational stability in a more peaceful environment.

​Fed maintains cautious approach

​Fed Chair Jerome Powell reiterated a cautious stance on rate cuts, emphasising ongoing inflation risks from potential tariffs. His comments suggested rate cuts would depend on sustained progress toward the Fed's inflation target.

​Soft US consumer confidence data increased market expectations for rate cuts later in the year, creating a mixed economic backdrop for monetary policy decisions.

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