US OPEN: Wall Street buoyed by robust data and shifting sentiment

Wall Street opened in an upbeat mood on Wednesday, with US index futures trending higher well before the opening bell. The primary catalyst for the bullish momentum was a surprisingly resilient ISM services report, which overshadowed lingering anxieties regarding the escalation of conflict in the Middle East. Simultaneously, the commodities complex witnessed heightened volatility; WTI crude retreated toward $74 per barrel as investors grew increasingly confident that the war in Iran may prove more short-lived than initially feared.

US500 Technical Analysis: Erasing yesterday’s decline

The S&P 500 staged a decisive rebound following the ISM release, which revealed the fastest expansion in the US service economy since mid-2022. Technically, the market is attempting to shake off a two-day sell-off triggered by the commencement of US and Israeli airstrikes against Iran.

The US500 is currently trading approximately 1% higher, bouncing off support near the 50.0 Fibonacci retracement level of the most recent upward wave. Despite the recovery, the index remains within a downward trending channel. A close in the 6890-6900 range would provide the technical foundation to test the upper boundary of this channel later this week. However, the broader trajectory for Wall Street remains contingent on Middle Eastern developments and the oil market, where any renewed price spikes could dampen expectations for further interest rate cuts.

Energy Sector: Shadowed by war and rising inventories

Despite the prevailing optimism across the wider market, the energy sector is grappling with profound uncertainty. While geopolitical strife typically bolsters prices, the combination of potential de-escalation and data showing a continued build in US crude inventories is exerting downward pressure on upstream valuations.

• Crude Oil: WTI prices are oscillating around $74, sensitive to signals that the conflict's duration may be more contained than previously anticipated.
• Oil Majors: Exxon Mobil retreated 1.6% today following a strong rally throughout late February and early March. Chevron fell 1.7%, though it maintains a year-to-date gain of nearly 22%.
• Chemicals: Dow Inc. (+3%) and LyondellBasell (+4.55%) both advanced following analyst upgrades, citing potential margin expansion and tighter supply dynamics resulting from the Iran conflict.

Cryptocurrencies: Trump-fuelled rally for ‘digital gold’ The digital asset sector emerged as one of the market’s strongest performers today. Bitcoin breached the $73,000 threshold, more than recovering the losses sustained since the outbreak of hostilities.

• Political Tailwinds: Crypto-linked equities surged after President Donald Trump publicly endorsed the Clarity Act—a market structure bill for the industry—and criticized traditional banks for undermining innovation in the stablecoin sector.
• Coinbase (COIN): Shares in the exchange jumped over 14% amid reports of a private meeting between the company’s CEO and President Trump.
• Other Players: MicroStrategy (MSTR) gained more than 11%, while Circle (CRCL) rose nearly 3.5%, riding the wave of optimism as Bitcoin resumed its upward trajectory.