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Last Friday, US equity indices finished mixed. The S&P 500 rose by 0.05%, while the Nasdaq 100 fell by 0.64%. The Dow Jones Industrial Average strengthened by 0.46%.
Today, Brent plunged as much as 7.4% below $90/bbl before retracing roughly half the loss, and equity indices rallied. The move followed a US pause in its nearly two-week campaign of strikes on Iran. The 10-year US Treasury yield fell by five basis points to 4.63%. European and Asian government bonds also rallied. Gold gained about 1%, approaching $4,100/oz. The MSCI Asia Pacific index rose by 0.5%, and Nasdaq 100 futures gained about 1.2%.
After 13 consecutive days of strikes on Iran, the US appears to have halted attacks from late Friday evening onward without offering an official explanation, raising questions about the president's next move. Iran's military said on Sunday that Tehran had also paused retaliatory actions. This is the first time in a long while both sides have paused simultaneously rather than one-sidedly.
A pause has knocked oil down, but stock market relief may be limited. With the Fed meeting approaching, markets will be reluctant to factor in a sustained de-escalation until they see clear evidence. Geopolitics sets the tone for this week, and, as noted earlier, the key event is Wednesday's Fed interest rate decision. Oil-driven inflation concerns in July have already displaced the unexpectedly soft US June CPI print — which had briefly given Fed officials more optionality — to the background.
Beyond policy, investors will watch tech earnings closely amid renewed scepticism over the return on AI-related investments. Microsoft and Meta are set to report on Wednesday, followed by Apple and Amazon on Thursday. In Asia, Samsung and SK Hynix are also due to report this week.
A leading corporate story in Asia today was the debut of Chinese memory-chip maker CXMT. Its Shanghai IPO sparked a monumental rally — shares jumped by about 535% — after a $9.8bn float. At the offer price, the company was valued at roughly RMB 3.3 trillion (~$487bn), making it the largest listing on mainland China's exchanges by market cap.
Technically, the S&P 500 daily chart suggests that the immediate task for buyers is to overcome the resistance level of $7,495. That would confirm upside and open the path to $7,518. Controlling $7,544 would further strengthen bulls' positions. On the downside, buyers need to defend $7,474. A break below that level would likely push the index back to $7,451 and open the way to $7,427.
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