US Markets
The S&P 500 Index erased early-session losses to close higher on Tuesday as big banks and healthcare companies rallied. The Nasdaq 100 Index ended the day with a slight decline after South Korean neocloud company Elice Inc. tanked in its trading debut, spurring concern about the sustainability of the global AI boom. The S&P 500 rose 0.3%, while the Nasdaq 100 fell 0.1%. The benchmark KBW Bank Index gained 1.5%, the most since early September, with top lender JPMorgan Chase & Co. advancing 0.5%.
Today, equity futures advanced after SpaceX reported strong results, bolstering confidence that the AI-led rally still has room to run. Nasdaq 100 futures rose as much as 1% in early Asian trading hours, while those on the S&P 500 gained as much as 0.5%. Elon Musk’s comment that SpaceX and Tesla Inc. are exploring a merger provided an added boost. Investors welcomed the positive AI newsflow after the recent wave of concerns over high borrowing costs that pumped the brakes on the market’s biggest driving theme.
SpaceX posted $4.4 billion in net income for the quarter ended in September, far better than analysts’ average projection of $1.88 billion. Investors will be looking to results from Meta Platforms Inc. and Tesla due Wednesday for further evidence that the AI boom is alive.
From a technical perspective, the S&P 500 index presents a bullish bias for the day. Daily RSI is near 50, which indicates that momentum is building. On the 1-hour chart, key support remains near $7,686 which coincides with the upward trendline connecting lows of 16th and 20th October. A fall below this level can push prices to the 16th October low of $7,635. On the upside, immediate target is at $7,764 which was the 16th October high, followed by 14th October high of $7,789.
US Dollar Index
In yesterday’s session, the dollar index fell almost 0.24% to 101.73 after oil fell almost 3% following an unconfirmed report of war negotiations with Iran. However, it settled higher after Bloomberg reported that claims the US and Iran are close to an agreement are inaccurate. In today’s session, the dollar is marginally higher, and the broader outlook still favours the US dollar. According to the CME Fedwatch, the markets are pricing in roughly an 84–88% chance of rates staying unchanged, though a hike remains fully priced for December, followed by nearly two more next year. On the geopolitical front, escalating Russia-Ukraine hostilities and ongoing clashes between Saudi Arabia and Iran-backed Houthi rebels in Yemen, alongside continued tanker attacks in the Strait of Hormuz, are reinforcing the dollar’s safe-haven appeal. Moreover, the broader momentum still favours the dollar rally, as the fear-greed index indicates. The Fear-Greed measure for the Bloomberg Dollar Spot Index has been positive for 24 consecutive days, its longest streak in a year. It gauges momentum by comparing buying strength with selling strength.
The dollar is also highly correlated with the 2-year Treasury yields, which are currently forming a technical bull flag. The dollar index is trading at 101.77 and is still holding above the immediate support level at 101.6, followed by the 50-day SMA at 100.4. A Fibonacci retracement from the high of 102.95 to the recent low of 101.60 suggests price could retrace to the 50% level at 102.27, followed by the 61.8% level at 102.43. This roughly coincides with the gap fill above and could make 102.51 a strong resistance level or a potential target to closely track. Conversely, a break below support at 101.6 may signal bearishness for the index.
EUR/USD is trading near 1.224. On the 4-hour chart, the 5-period RSI is trending lower, suggesting momentum is fading. Given the dollar’s broader strength, a sell-on-rise approach is favoured. A break below immediate support at 1.1203 would signal further bearishness, with the next support observed at 1.118. This level also roughly aligns with the 50% retracement from the 1.111 low to the 1.13 high. Conversely, a break above the 1.13 resistance would be bullish for the pair.
Crude Oil
WTI experienced a volatile session yesterday, briefly climbing above $103 before retreating toward $97, and is currently trading near $100 (+0.45%). Brent has risen above $110, as escalating Middle East tensions and renewed threats to energy infrastructure keep supply concerns elevated.
Oil prices are being supported by fresh disruptions around the Strait of Hormuz, where Iran’s Revolutionary Guards reported that tankers attempting to cross through unauthorised routes were hit by sea mines. Meanwhile, Iran-backed Houthi militants have claimed attacks on Saudi energy facilities, raising concerns about potential disruptions to alternative export routes. These developments reinforce the risk of a prolonged supply shock, even as diplomatic efforts continue.
Hopes for a U.S.–Iran agreement briefly weighed on prices after Pakistan renewed mediation efforts. However, the U.S. reduced prospects of a swift resolution, while Iran continues to claim that the Strait will remain closed until its demands are met. With the conflict showing little sign of a lasting breakthrough, geopolitical risks continue to underpin crude prices. Shipping costs are adding further pressure, with global crude freight rates above $20 per barrel, up from around $3 a year ago. Higher transportation and war-risk premiums could increase refined fuel costs and squeeze refinery margins.
Both WTI and Brent retain a bullish bias for the day. Technically, WTI could face resistance near $103, followed by $104.8, while support lies near $98.5. Brent faces resistance near $113.5, with support around $109.5, followed by 108.8 (50 EMA on the 4-hour chart). Volatility is likely to remain elevated, with prices highly sensitive to developments around Hormuz, attacks on energy infrastructure, and U.S.–Iran negotiations.
Gold & Silver
Precious metals continued their moves in opposite directions on Tuesday, with gold down another 0.37% while silver jumped 1.57%. Both metals were lower in the Asian session on Wednesday, with gold down 0.10%, marking its 4th straight session in red and silver down 1.15%.
Gold was in decline as conflicting signals on the progress of the Iran war continued to cloud the outlook for inflation and the Fed’s trajectory for interest rates. Bullion has fallen over 1% this week and Brent was flat after having pared back from a 5 month high on Tuesday following a diplomat’s statement that reports of an imminent deal to end the conflict were wrong. Gold has been down by around a fifth since the US-Iran conflict broke out in late February, which has seen oil prices rise and inflation fears mount. Higher borrowing costs are a drag on gold as it doesn’t pay interest. That said, investors are looking beyond the higher oil prices and bond yields and are in fact adding to their ETF gold positions, with ETF holdings now at a 4 year high. This is supported by central bank demand which is likely to provide a floor to prices as central bank buyers are a clear signal that the central bank can’t raise rates much further without risking a sharp economic slowdown. ETF investors are still quite out of sync with the metal itself with holdings up despite a roughly 12% correction from the late August peak. The three year z-scored divergence between ETF holdings and gold futures has widened to +0.7, approaching its three year high. The risk is therefore less of a breakdown in the secular bull market and more of a positioning adjustment that the ETF investors have yet to fully absorb.
Technically, Gold prices remain rangebound between the $4070-$4220 levels this month, so a break on either side will be needed before a strong medium-term direction can be established. The $4080 level could provide near-term support from a trendline connecting the lows of 30th June, 17th July, 7th October, and 14th October on the daily chart. Silver seems to be rebounding from a horizontal support from the lows of 24th June, 17th July, and 14th October, with 9-period RSI recovering from oversold territory, suggesting a market structure tilted towards the upside in the immediate term.
