Nasdaq 100 Leads Wall Street Rebound as Middle East Peace Boosts Risk

Nasdaq 100 futures led a broad risk-on rally at the start of the week, while the Dow Jones moved within reach of fresh record highs. Oil prices tumbled and Wall Street futures surged as traders welcomed easing geopolitical tensions in the Middle East.

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Wall Street Rallies as Middle East Peace Hopes Lift Nasdaq 100 and Dow Jones

Appetite for risk surged at this week’s open after reports emerged that the US and Iran had agreed to a ceasefire framework, with Pakistan claiming a final text has been agreed ahead of a formal signing. The deal reportedly includes an immediate halt to hostilities, an end to the US naval blockade, and the reopening of the Strait of Hormuz, helping to ease fears of supply disruptions. While details still need to be finalised and broader negotiations are expected to continue over the coming months, markets have welcomed the development as a significant step towards reducing geopolitical tensions in the Middle East.

Source: LSEG, CME

Markets Embrace Middle East Ceasefire as Risk Appetite Returns

• Crude oil is currently down 4.6%, although both WTI and Brent remain near their 200-day EMAs, which could provide support.
• Gold futures are up 1.8% and trading at a five-day high, although the 200-day EMA is currently acting as resistance.
• The US dollar is broadly lower, while the Swiss franc is the strongest major currency, with USD/CHF once again retreating towards its 200-day EMA.
• AUD/USD initially rose 0.7% before retreating, with the session high stopping just shy of the 0.7100 level.
• EUR/USD reached a five-day high.
• Wall Street futures gapped higher, with Nasdaq 100 futures leading the rebound, currently up 1.6% from Friday's close. S&P 500 futures are up 1.0%, while Dow Jones futures are up 0.8%.

Wall Street Rebounds: Nasdaq 100 Leads the Way, Dow Jones Eyes Record High

The pullback on Wall Street from its record highs lasted just six days before support emerged, albeit in volatile fashion. Daily ranges between Tuesday and Thursday last week were above average, yet bulls still managed to build a base that fuelled Friday’s rebound, which extended at today’s open.

The opening gaps for Nasdaq 100 and S&P 500 futures were their most bullish since October, with the Nasdaq leading the surge. Futures opened above 30,000 before extending higher. Yet it is the Dow Jones that appears to be the true outperformer during this rebound, as it is by far the closest to retesting its record high, sitting just 0.4% below it.

The fact that the Dow is pausing just beneath its record high is noteworthy, as a failure to break decisively higher could stall the rally in the S&P 500 and Nasdaq 100, at least temporarily. And with the ASX 200 already having exceeded its average daily range by a wide margin, its rebound may also be due for a pause. That could serve as a warning for bulls chasing the move at current levels.

Source: CME, CBOT, TradingView

ASX 200 Technical Analysis

ASX 200 Options Positioning Highlights

The Middle East peace headlines have triggered a strong risk-on move, with SPI futures trading above Friday's cash close and pushing into the upper end of the recent range. Importantly, futures are now approaching the 8950–9000 zone where options positioning becomes increasingly restrictive. While today's gap higher could attract momentum buying, call open interest becomes increasingly concentrated at 9000 and 9100, creating a potential headwind for further gains. Unless buyers can achieve acceptance above 9000, the risk remains for gains to slow or rotate back toward the 8900 area.

Can Peace Headlines Trigger a Breakout Above 9000?

For this week's expiry, 8900 appears to be the key battleground level. It sits close to current price and has meaningful open interest on both sides, making it the most likely magnet if today's euphoria fades. The overnight news flow favours upside probes initially, although the market is moving into resistance rather than breaking free into open air. The rally has also pushed 4-hour RSI into overbought territory, which could encourage some profit-taking if buyers fail to secure a sustained break above 9000. Should gains fade, 8900 remains the first area of interest, with stronger support around 8800 and 8750. Traders may want to watch whether any early move above 8950 can hold through the cash session, as rejection there could see price gravitate back towards the 8900 magnet.

Source: ASX, TradingView

• Bullish above 8950: Peace-deal headlines have boosted risk appetite, but traders may want to see acceptance above 8950 before targeting 9000 and potentially 9100.
• 9000 is the key test: Heavy call open interest and chart resistance around 9000 could slow the rally or trigger profit-taking, especially with 4-hour RSI already overbought.
• Watch 8900 on pullbacks: If the initial rally fades, 8900 remains the key magnet and battleground, with stronger support levels sitting at 8800 and 8750.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

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