General Market Analysis – 12/06/25

Volatility Returns to Markets – Nasdaq Drops 0.5%

Volatility returned to financial markets in trading yesterday as multiple geopolitical updates and data hits saw markets move. Upbeat news on the US–China trade talks, a lower-than-expected US CPI print, and increased Middle East tensions all hit markets hard yesterday. US stocks fell on the day but weren’t hit too hard, as the data pulled rate cut expectations in. The Dow closed flat, the S&P dropped 0.27%, and the Nasdaq fell 0.50%. The dollar and US Treasury yields both fell, the DXY down 0.32% to 98.65, while the 2-year yield fell 6.7 basis points to 3.952% and the 10-year dropped 5.0 basis points to 4.420%. Oil prices surged on news that the US may be evacuating its embassy in Iraq, Brent up 4.55% to $69.91 and WTI up 5.08% to $68.28. Gold also moved higher on the haven trade, up 1.20% to $3,354.40.

Oil Surging Higher on Middle East Tensions

Oil prices flew higher in trading yesterday as the US advised that it was moving personnel out of the Middle East after Iran threatened to strike US bases in the region if nuclear talks broke down. Brent jumped over 4% and WTI over 5%, and any further updates of escalation in the situation should see supply concerns increase and prices move even further north. Traders are also looking closely at trade talks, and any positive news on that front could put added pressure on moves higher from the demand side. WTI is now trading close to the 200-Day Moving Average, and a strong break here from a technical perspective should take it towards the long-term resistance currently around $73.65. Support now sits at the previous resistance level near $65.00.

Geopolitics in Focus Again for Markets Today

Geopolitics looks set to dominate market flows in the sessions ahead today; however, crucial data out of the UK and another key inflation update from the US will also see markets move on fundamentals. Updates on both trade talks and the potential for more unrest in the Middle East have seen markets jump into action overnight, and traders are preparing for more volatility today. The Asian session has little on the data calendar, and indeed most geopolitical updates are not expected in the first session of the day, so markets may take a bit of a breather early on. However, once European markets open, we should see things pick up again. The initial focus will be on UK markets with the release of the latest GDP data (exp -0.1% m/m); however, it will soon shift to any trade updates or news from the Middle East. The New York open sees the release of the PPI data (exp +0.2% m/m) and the Core PPI data (exp +0.3% m/m), with another weaker print likely to push the dollar lower. The Weekly Unemployment Claims data is also due out; however, overall, expect geopolitical updates to dominate moves.

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