Wall Street surges as ceasefire eases tensions, Powell signals patience on rates

US stock markets rallied for a second consecutive session on June 24, with major indices climbing more than 1 per cent as investors welcomed signs of de-escalation in West Asia and parsed Federal Reserve Chair Jerome Powell’s testimony for insights into future interest rate policy. A tentative ceasefire between Iran and Israel, following US attacks on Iranian nuclear facilities, helped fuel optimism, even as geopolitical instability remained. Asian markets also reacted positively to the truce between Iran and Israel and falling oil prices.

The Nasdaq 100 surged 1.5 per cent to close at a record 22,190.52, beating the previous high it hit on February 19. The broader Nasdaq Composite rose 1.43 per cent, while the S&P 500 gained 1.11 per cent, ending the day just under 1 per cent from its own record close. The Dow Jones Industrial Average jumped 507 points, or 1.19 per cent, to 43,089.02.

Tech stocks led the charge, with the “Magnificent Seven” megacaps mostly advancing. Nvidia climbed 2.6 per cent, Microsoft hit a new record high, and Alphabet, Amazon, and Meta each rose about 2 per cent. Tesla lagged, falling 2.4 per cent, while Apple dropped 0.6 per cent. Semiconductor stocks soared, with AMD and Intel up more than 6 per cent and Broadcom gaining nearly 4 per cent after an upgrade from HSBC. Energy stocks, however, slumped as crude prices retreated for a second day. West Texas Intermediate (WTI) fell 6 per cent on June 24, as the risk of a major oil supply disruption receded, but it rebounded more than 1 per cent on June 25. The S&P 500 Energy Index declined 1.5 per cent.

Meanwhile, Powell reiterated to Congress that the Federal Reserve is in no rush to cut rates, saying policymakers are prepared to wait for more clarity on inflation and economic conditions before adjusting their stance. Markets are currently pricing in about an 18 per cent chance of a rate cut in July, with expectations for a higher likelihood in September.

Despite Powell’s cautious tone, weaker-than-expected consumer confidence data reinforced the market’s belief that a rate cut is increasingly likely later this year. Confidence in the job market has fallen to its lowest since March 2021.

Dollar softens, bond yields ease

The dollar slipped to multi-week lows on June 24 as investors reacted to Powell’s remarks and lower oil prices, which eased inflation concerns. The US dollar index edged down 0.1 per cent to 97.854, while the euro rose 0.1 per cent to $1.1625, its highest level since late 2021. The yen strengthened slightly, with the dollar slipping to 144.70 yen. US Treasury yields also declined, with the two-year yield falling to 3.787 per cent, its lowest since early May, as investors adjusted their expectations for future monetary policy.

Asian equities steady as West Asia tensions cool

Asian markets steadied, supported by the tentative truce between Iran and Israel and easing oil prices. Japan’s Nikkei and Australia’s ASX200 were flat, while Taiwan’s benchmark index gained 1 per cent. Hong Kong’s Hang Seng rose 0.6 per cent, while mainland China’s CSI300 dipped slightly.

Investors now await key US data later in the week, including the final estimate for first-quarter GDP and the closely watched Personal Consumption Expenditures (PCE) report, which could provide further clues about inflation trends and consumer health.