North America’s main indexes opened higher on Friday, tracking strength in global stocks after President Donald Trump held off from making an immediate call on U.S. involvement in the Israel-Iran war.
Canada’s main stock index was boosted by gains in the information and technology sector. At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 0.5 per cent at 26,649.60 points.
In New York, the Dow Jones Industrial Average rose 119.4 points, or 0.28 per cent, at the open to 42,291.09. The S&P 500 rose 18.8 points, or 0.31 per cent, at the open to 5,999.67, while the Nasdaq Composite rose 93.1 points, or 0.48 per cent, to 19,639.408 at the opening bell
As hostilities between the two Middle Eastern countries approached their second week, the White House said on Thursday Trump will decide in the next two weeks whether the U.S. will get involved on Israel’s side.
Markets have been on edge as Mr. Trump has kept the world guessing on his plans – veering from proposing a swift diplomatic solution to suggesting the U.S. might join the fight as Israel aims to suppress Tehran’s ability to build nuclear weapons.
A senior Iranian official told Reuters Tehran was ready to discuss limitations on its uranium enrichment, but zero enrichment will be rejected “especially now under Israel’s strikes.”
“Any news flow that’s going to lean in the direction of de-escalation is going to be a market positive and we’re seeing that to a certain extent here,” said Art Hogan, chief market strategist at B. Riley Wealth.
The oil price volatility triggered by the Middle East conflict has also become a fresh concern as the U.S. grapples with tariff-based price pressures.
The Fed kept interest rates unchanged on Wednesday, in line with market expectations. Policymakers, however, cautioned about inflation picking up pace over the summer as the economic effects of Mr. Trump’s steep import tariffs kick in.
The S&P 500 and the Nasdaq are set for weekly gains, while the blue-chip Dow is on track for mild weekly declines.
Investors are also bracing for any potential spike in volatility owing to Friday’s “triple witching” – the simultaneous expiration of single stock options, stock index futures, and stock index options contracts that happens once a quarter.
Wall Street’s strong gains last month, primarily driven by a softening in Trump’s trade stance and strength in corporate earnings, had pushed the benchmark S&P 500 index close to its record peaks before the ongoing conflict in the Middle East made investors risk-averse.
The S&P 500 index stood about 3 per cent below its record level, and the tech-heavy Nasdaq remained 3.3 per cent lower.
Rising risks from the Middle East have loomed large on the world’s top indexes again this week.
Europe’s main bourses were all between 0.5-1.4 per cent higher after similar gains across Asia, although it was touch and go whether it would be enough to prevent a second straight weekly loss for MSCI’s main world index.
Israel bombed targets in Iran, and Iran fired missiles at Israel overnight as the week-old war continued but Friday’s market moves, which also included a modest drop in the dollar , showed an element of relief.
That was largely pinned on Thursday’s statement from the White House that Mr. Trump will decide in the next two weeks – rather than right away – whether the U.S. will get involved in the war.
European foreign ministers were meeting their Iranian counterpart in Geneva on Friday, seeking a path back to diplomacy over its contested nuclear program.
The relief the U.S. wasn’t charging into the conflict sent oil prices down as low as US$76.10 per barrel, although they are still up 4 per cent for the week and 20 per cent for the month.
“Brent crude is down 2.5 per cent today in the clearest sign that fears over an imminent escalation in the Israel/Iran conflict have eased,” MUFG strategist Derek Halpenny said.
Gold, another traditional safe-haven play for traders, was also lower on the day.
Asian shares had gained 0.5 per cemt overnight thanks to a 1.2-per-cemt jump in Hong Kong’s Hang Seng and as newly elected President Lee Jae Myung’s stimulus plans saw South Korea’s Kospi top 3,000 points for the first time since early 2022.
China’s central bank held its benchmark lending rates steady as widely expected in Beijing, while data from Japan showed core inflation there hit a two-year high in May, keeping pressure on the Bank of Japan to resume interest rate hikes.
That in turn lifted the yen and pushed down the export-heavy Nikkei in Tokyo.
The dollar was ending an otherwise positive week on a modest downer, with the euro up 0.3 per cent against the U.S. currency at US$1.1527 and the pound 0.2 per cent higher at US$1.3494.
The U.S. bond market, which was also closed on Thursday, resumed trading with the key 10-year Treasury bond yield flat at 4.39 per cent, while German 10-year yields , which serve as Europe’s borrowing benchmark rate, fell 2.5 basis points to 2.49 per cent.
Gold prices eased 0.8 per cent to US$3,345 an ounce, leaving them set for a weekly loss of 2.5 per cent.
But the main commodity market focus remained oil. Brent crude futures were last down US$2.45, or around 3 per cent, at US$76.43 a barrel in London although they were still on track to end the week almost 3 per cent higher.
PVM analyst John Evans said oil producers’ “nightmare scenario” was that Iran or its proxies could block the Strait of Hormuz, something which has never happened and through which 20 million barrels is shipped each day.
JPMorgan estimates that amounts to about 20 per cent of all global oil trade and 30 per cent of seaborne oil trade.
“The market is currently assigning a probability below 20 per cent to this happening,” JPMorgan’s Francesco Arcangeli wrote in a note, estimating thought that a full closure of the Strait could see oil prices surge to US$120-US$130 a barrel.
Reuters
