S&P 500 rises as dollar weakens on Israel-Lebanon talks

The S&P 500 edged higher while the US dollar weakened for a ninth day as Donald Trump signalled imminent Israel-Lebanon talks, lifting risk appetite. Global equities hit fresh highs, with strong gains in Asia and steady advances expected in Europe. The dollar’s slide reflects easing geopolitical risk and shifting expectations around the Federal Reserve amid tensions involving Jerome Powell.

Equities

The FTSE 100 closed lower on Wednesday, falling around 0.5% as healthcare and consumer-facing stocks dragged on the index. The decline came despite some stability in oil prices, which remained below $100 per barrel, while investors continued to monitor developments in the Middle East.

In London trading, GSK fell sharply, ending the session down roughly 2.7% and weighing heavily on the healthcare sector. Burberry also declined, dropping about 2.2% after disappointing updates from European luxury peers unsettled sentiment across the sector. Precious metal miners were weaker as gold edged lower, while banks trimmed earlier losses to finish only slightly down.

There were pockets of strength among UK stocks. Saga rose about 6% after confirming it was ahead of schedule in reaching its medium-term profit targets, supported by improving performance in its travel and insurance divisions. Barratt Redrow gained roughly 3.5% by the close, even as the housebuilder outlined plans to reduce land spending and approvals. Antofagasta edged higher after indicating that copper production is expected to increase through the year, although gains were modest after earlier strength faded.

On Wall Street, the S&P 500 and Nasdaq both closed at record highs on Wednesday, with the S&P 500 rising around 0.8% and the Nasdaq gaining roughly 1.6%. The Dow Jones Industrial Average slipped slightly, ending the session lower.

Bank stocks supported the advance, with Bank of America closing higher after reporting growth in quarterly profit. Morgan Stanley rose more strongly, gaining about 4.5% following a jump in earnings. In the technology sector, Broadcom climbed roughly 4.2% after Meta extended a custom chip agreement, helping lift the wider sector.

Some of the largest gains came from smaller, high-growth names. Allbirds surged dramatically, closing up more than 500% after announcing a shift towards AI infrastructure. Snap also moved higher, rising close to 8% after confirming plans to cut around 1,000 jobs as part of a restructuring effort.

Quantum computing stocks were particularly strong during the session. D-Wave Quantum jumped more than 20%, while Rigetti Computing and Arqit Quantum also posted double-digit gains, extending recent momentum in the sector.

Forex & Commodities

The US dollar traded near six-week lows early this morning, with the dollar index hovering around 97.97 as investors continued to unwind safe-haven positions. Sterling edged higher to approximately 1.358 against the dollar, holding close to levels seen before the Iran conflict began, while the euro pushed above 1.180, extending its recent upward trend. The offshore yuan remained firm near 6.815 per dollar, supported by stronger Chinese export performance and steady capital flows.

Expectations of a potential peace agreement between the United States and Iran have driven much of the recent currency movement. Comments from Donald Trump indicating that the conflict is close to resolution, alongside renewed diplomatic efforts involving Pakistan, have encouraged markets to price out geopolitical risk. The Australian dollar strengthened to around 0.7197 earlier in the session, reaching a multi-year high, while the New Zealand dollar also moved higher to near 0.5916.

Gold prices moved higher in early trading, with spot gold rising to approximately 4,831 per ounce as the weaker dollar and softer US Treasury yields improved the appeal of non-yielding assets. Market pricing now reflects a reduced likelihood of prolonged elevated US interest rates, with traders assigning a modest probability to a rate cut later this year.

Oil markets were more subdued, with Brent crude trading near 94.67 and US crude around 91.43. Prices remained volatile as optimism over potential peace talks was tempered by continued disruption to flows through the Strait of Hormuz. Analysts noted that global supply conditions remain tight, particularly as US inventories declined and sanctions on Iranian oil exports persist.