- US markets pause for air, S&P 500 approaches new high.
- US dollar at three-year low.
- Oil prices begin to stabilise.
- Shell denies BP takeover rumours.
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“A sense of calm has descended on markets this morning as high-stakes drama on the global stage took the night off. The FTSE 100 opened broadly flat as investors wait for fresh catalysts.
US markets took a pause yesterday as investors digested recent gains, and low trading volume sapped momentum. Futures suggest a positive open later today, though, as the S&P 500 moves ever closer to fresh all-time highs. Easing tensions in the Middle East, the potential for rate cuts coming later this year, and stabilising oil prices are helping support a relatively positive outlook for equities despite all the background noise.
The US dollar fell to its lowest level in more than three years. Traders increased their odds of rate cuts later this year after Fed Chair Jay Powell acknowledged that, absent tariffs, the Fed would likely have cut rates again by now. Debt concerns are also keeping the US dollar down, as the US debt mountain is expected to soar in the coming years should Trump’s ‘Big Beautiful Bill’ be passed into law.
Oil prices nudged higher this morning, with Brent crude touching $68 a barrel as traders positioned ahead of pivotal US–Iran nuclear talks that could reshape the sanctions landscape. While President Trump doubled down on his ‘maximum pressure’ stance, subtle hints of softer enforcement and China’s continued appetite for Iranian crude added a layer of uncertainty to supply expectations. The market, having shaken off earlier losses, is now balancing geopolitical risk with the potential for shifting policy winds.”
Derren Nathan, head of equity research, Hargreaves Lansdown:
“Shell has denied media speculation of early talks to buy rival BP. Structurally lower oil prices are causing the majors to look at their options, but given Shell’s superior asset quality and balance sheet, any combination may be difficult for its shareholders to stomach. Cherry picking some flagship assets could be another option, but that’s unlikely to satisfy BP investors. For now, the focus for Shell is likely to remain on buying back its own shares.”
