S&P500 hits record as Middle East optimism reigns

Wall Street continued to believe that the US and Iran will work out a peace deal, with the S&P 500 on track to close at a record, with tech majors such as Microsoft, Salesforce and Tesla among gainers and the Nasdaq Composite poised for its 11^th straight gain.

Bank of America and Morgan Stanley were both on the green side of the ledger after reporting strong quarterly sales, with trading revenue helping them make bank in busy markets, while platform operator Robinhood surged for a second day as Dot-com era margin rules for day traders were wound back.

Allbirds made international headlines and surged 689% after putting a bird on an artificial intelligence pivot having agreed to sell its footwear business.

And the mood in the antipodes is more muted with Australian futures marginally lower in a quiet locally, with no data expected and contract labour firm Accordant Group holding a special meeting to decide on whether to approve a $6.7 million rights offering backed by its controlling shareholder, the Hull family.

Defying sceptics

Stocks on Wall Street were broadly stronger, with tech companies extending the rally for the Nasdaq, which was up 1.4% in late trading, and the S&P 500 touching an intraday high and climbing 0.7%. The Dow Jones Industrial Average bucked the trend, down 0.1%, with Caterpillar and Sherwin-Williams at the bottom of the leaderboard.

Investors remained optimistic that the US and Iran will reach a lasting peace, with mediators pushing for an extension to the two-week ceasefire. The volatility index, known as Wall Street’s fear gauge, fell 2.3% to 17.43, while the Polymarket prediction market is pricing in a 70% chance of a permanent truce by the end of June and 58% chance by the end of May. Brent crude oil futures dipped 0.2% to US$94.72 a barrel at 7am in Auckland.

“Markets have been steadily pricing out much of the risk premium that built up after the conflict began, as the US and Iran move toward a second round of negotiations,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note.

Corporate earnings season continued with Morgan Stanley and Bank of America rallying after they both beat analysts’ expectations, in contrast to results from JPMorgan Chase and Goldman Sachs earlier this week.

Robinhood jumped 9.9%, extending its surge, as the Securities and Exchange Commission drops the pattern day trader rule requiring people who make four day trades – where they buy and sell stock in the same day – in a five-day period to hold at least US$25,000 in their margin account.

New Zealand-born Allbirds surged 689% to US$19.65 as it looks to life after footwear, saying it’s secured a US$50 million convertible facility to fund a pivot into AI infrastructure.

Fed rumblings

The kiwi edged up to 59.15 US cents at 7am from 59.01 cents, with the yield on US 10-year Treasurys up 3 basis points at 4.28%. US President Donald Trump reiterated his threat to fire Federal Reserve chair Jerome Powell if the central banker didn’t resign from the board once he relinquishes the chair next month.

Things were more mixed across the Atlantic, with the UK’s FTSE 100 down 0.5%, while France’s CAC 40 dropped 0.6% as luxury was knocked by weak sales at Kering and Hermes. Germany’s DAX gained 0.1%.

Australian futures are pointing to a marginally weaker start for the S&P/ASX 200 index when trading opens across the Tasman, with energy firm Santos holding its annual meeting today.

The Real Estate Institute of New Zealand’s monthly house sales report is expected today, while corporate activity includes Accordant’s online special meeting to vote on approving the participation of its controlling shareholder, the Hull family, in a $6.7 million capital raising.

And retailer Hallenstein Glasson Holdings sheds rights to its upcoming 29 cents per share dividend payment.

Reporting by Paul McBeth. Image from Mike Chavarri on Unsplash.