US equity futures edged higher on Thursday night as Wall Street looked set to close out the week with gains despite ongoing volatility tied to bond yields and the Iran war.
Dow Jones futures rose 40 points, while S&P 500 futures gained 0.1% and Nasdaq 100 futures added 0.2%.
The S&P 500 is up 0.5% for the week and on track for its eighth consecutive weekly gain. The Dow Jones Industrial Average has climbed 1.5% this week and is headed for its third positive week in four, while the Nasdaq Composite has added 0.3%.
Investor sentiment remained sensitive to movements in bond markets after the 30-year US Treasury yield surged above 5.19% earlier this week, reaching its highest level since before the global financial crisis. Yields later eased, with the 30-year rate falling back to around 5.09% on Thursday.
Markets have experienced heightened volatility in recent sessions as investors reassess inflation risks, interest rate expectations and the impact of elevated energy prices on economic growth.
Oil prices moved lower as optimism increased around a potential agreement between the United States and Iran that could help end hostilities and reopen the Strait of Hormuz.
Adam Crisafulli, founder of Vital Knowledge, said a deal between the US and Iran remained more likely than not, although he cautioned that the conflict could still have stagflationary effects over coming quarters.
Investor attention is also turning to the Federal Reserve after President Donald Trump confirmed Kevin Warsh would be sworn in on Friday as the next Fed chair, succeeding Jerome Powell.
Oil and macro
Oil prices declined as traders responded to growing speculation that the US and Iran may be moving closer to an agreement to end the war.
US West Texas Intermediate crude fell nearly 2% to settle at US$96.35 a barrel, while Brent crude declined more than 2% to US$102.58.
The easing in oil prices provided some relief for markets after recent concerns that prolonged disruption around the Strait of Hormuz could intensify inflation pressures globally.
Bond markets remained another major focus for investors after this week’s sharp rise in long-term Treasury yields renewed concerns about borrowing costs and financial conditions.
Australian Market Outlook
Australian shares are expected to open higher following easing oil prices and steady gains across US equity markets overnight.
S&P/ASX 200 futures are up 35 points, or 0.4%, to 8,681.
Investor sentiment locally may also be supported by renewed optimism surrounding negotiations between the US and Iran and the potential reopening of the Strait of Hormuz.
In US trade, the Dow Jones Industrial Average closed at a fresh record high, supported by gains in IBM, Cisco and Honeywell, while utilities led advances across the broader market.
IBM surged 12.4% after securing US government funding to support quantum computing chip production. Several other technology and quantum computing companies also received funding commitments from the US Commerce Department.
Nvidia fell 1.8% despite reporting quarterly earnings ahead of expectations, with some analysts attributing the weakness to investors building cash positions ahead of anticipated listings involving SpaceX, OpenAI and Anthropic.
