Global Equities Push Higher, Dollar Rises on U.S.-Iran Progress

By Dow Jones Newswires Staff

Global stocks and U.S. futures were higher in early European trade following a pause in tech declines Tuesday.

Meanwhile, Iran and the U.S. both reported progress following talks in Switzerland, holding gold around $4,900 an ounce though the lingering risk of escalation checked oil's losses from the previous session. The U.S. dollar also rose on the constructive readouts, and received a further boost from Japan's commitment to invest around $36 billion in the U.S. Trading remains thin due to Lunar New Year celebrations closing a handful of Asian markets.

The euro and eurozone sovereign debt were little changed following a report that European Central Bank President Christine Lagarde is considering ending her term early, although the bank said she has not yet made a decision. Investors will be watching for Wednesday's release of Federal Reserve minutes from its January meeting on the direction of interest rates.

--Futures for U.S. blue-chip indexes rose in early European trade, led by the tech-heavy Nasdaq. The Dow Jones Industrial Average and S&P 500 nudged up 0.2% and 0.3%, respectively, while the Nasdaq climbed 0.4%. Futures tied to the "Magnificent Seven" tech stocks were uniformly up, led by a 1.5% gain for sector bellwether Nvidia.

Despite gains for equities Tuesday, stable headline figures masked sizeable dispersion under the surface, Deutsche Bank's Jim Reid said. A gauge of software stocks fell 1.6% Tuesday, suggesting lingering investor concerns around the threat of artificial intelligence.

--Markets in Mainland China, Hong Kong and South Korea remain closed for Lunar New Year Celebrations. Japan's Nikkei 225 closed up just over 1% as financial and basic materials stocks climbed.

--European indexes were all higher at the opening bell as defense stocks jumped across the continent. Record orders announced by BAE Systems pushed the stock up 5% in London, helping the FTSE 100 rose 0.3%. The German DAX was up 0.5% as defense and energy stocks climbed higher, with Rheinmetall and Siemens both rising around 2.5%. Thales rose 4.3% in Paris as the CAC 40 climbed 0.3%, though grocer Carrefour fell 4.8%. The Italian FTSE MIB gained 0.6%, boosted by Leonardo and a 3.4% gain for Banca MPS after the bank said it would delist Mediobanca, which rose 7.9%. Spain's IBEX 35 gained 0.7% as Puig Brands surged 5.9% on positive earnings, while Indra Sistemas was up 2.4%.

--The dollar rose on progress in Iran and the U.S. talks and Japan's agreement to invest about $36 billion in the U.S. Japan's planned investments span critical minerals, oil and gas infrastructure and power generation as part of a broader $550 billion strategic trade and investment agreement. The DXY dollar index rose 0.2% to 97.298.

The euro was little affected by a Financial Times report that ECB President Christine Lagarde could resign before the end of her term in October 2027. Even if the news is confirmed, there's unlikely to be much market impact, Danske Bank analysts said in a note. Lagarde's potential departure before the April 2027 French presidential election would allow Emmanuel Macron to be among the EU leaders selecting her replacement. "This raises the likelihood of getting a classical candidate and smoothens the process," the analysts said. The euro fell 0.2% to $1.1835, driven by a stronger dollar.

--U.S. Treasury yields rose in Asian trade ahead of several economic data releases as well as the minutes of the latest Federal Reserve meeting. Durable goods orders, housing starts and industrial production data are on the agenda. The two-year Treasury yield was up 0.4 basis points to 3.440%, while the 10-year yield rises 1.5 bps to 4.068%, according to Tradeweb. The two- to 10-year curve steepened due to a bigger rise in the 10-year yield.

Eurozone government bond yields were unfazed by the FT report on Lagarde, as they rose in early trade in line with U.S. Treasurys. Wednesday's data calendar is thin and so is sovereign-bond issuance, with only Germany holding an auction for the February 2036 Bund. The 10-year Bund yield rose 0.9 bps to 2.750%, according to LSEG.

--Bitcoin edged higher along with other cryptocurrencies after a pause in tech stocks selling. However, the cryptocurrency's gains were modest as investors await more clarity from upcoming U.S. economic data before taking larger directional positions, Saxo Bank analysts said in a note. Bitcoin rose 0.8% to $68,183, while Ether climbed 0.9% to $2,017

--Oil prices ticked higher as traders assessed progress in U.S.-Iran negotiations. Brent crude and WTI were both up 0.4% to $67.70 a barrel and $62.17 a barrel, respectively, after settling lower in the previous session. "Crude traders have adopted a wait-and-see stance as apparent diplomatic progress in U.S.-Iran nuclear talks has weighed on prices," analysts at Saxo Bank said. "However, the risk of sudden escalation--given the U.S. buildup of military assets and Iranian threats--is likely to sustain a geopolitical risk premium, currently estimated at $3-$5 per barrel."

--Gold prices rebounded above $4,900 as investors bought the dip following a two-day slide in thin trading conditions. New York futures rise 0.8% to $4,945.60 a troy ounce in early trading. "In the near term, expectations around rate cuts remain key, as lower borrowing costs would support non-yielding assets like gold," Soojin Kim from MUFG said. "Longer term, major banks continue to expect renewed gains, citing persistent geopolitical tensions, concerns about the Fed's independence, and investor diversification away from sovereign bonds and currencies."

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(END) Dow Jones Newswires

02-18-26 0453ET