Geopolitical developments keep markets on edge
United States (US) equity markets extended their winning streak to close out Friday, the week and the month at fresh record highs. The rally was largely underpinned by growing optimism surrounding a potential 60‑day ceasefire extension between the US and Iran, a move that would pave the way to reopening the Strait of Hormuz.
By Friday’s closing bell, the tech-heavy Nasdaq 100 had gained 2.89% for the week and a remarkable 10.49% for May, building on its blistering 15% surge in April. The S&P 500 added 1.43% last week to cap off a robust 5.15% monthly advance, while the Dow Jones chipped in with a solid 452-point gain (+0.89%) for the week and 1384 points (+2.79%) for the month.
Over the weekend, reports emerged that while President Trump remains keen to finalise the deal, he is actively pushing to strengthen several key clauses – most notably those concerning Iran’s enriched uranium stockpile. Further dampening near-term expectations, reports indicate that Israeli troops have pushed deeper into Lebanon, despite a six-week-old ceasefire remaining nominally in effect. Meanwhile, concerning footage has surfaced showing objects resembling naval mines floating in the Strait of Hormuz.
The latter serves as a stark reminder that even if a diplomatic agreement is inked, it won’t instantly unleash a flood of crude supply. Mines must be cleared, damaged infrastructure repaired, shut-in production restarted and tankers carefully repositioned.
These lingering geopolitical hurdles saw crude oil jump roughly 2.5% on the reopen this morning, reclaiming the $90 handle. US equity futures, however, remain entirely unfazed and are trading marginally higher in early action.
SpaceX IPO
With earnings season largely in the rearview mirror, market attention will now pivot to this week’s crucial jobs data and the roadshow for the highly anticipated SpaceX initial public offering (IPO). Set to launch on 12 June, the blockbuster debut is widely expected to eclipse anything we’ve seen before.
SpaceX will comprise three key business segments:
- Connectivity (Starlink): the main cash engine and currently the only consistently profitable segment, serving 10 million customers.
- Space (launch services): having already delivered over 2000 metric tonnes to orbit – the equivalent of five International Space Stations – it boasts a structural cost advantage that becomes more powerful with every Starship flight.
- AI and compute: the true wildcard, this division (including Grok, X and the Cursor partnership) potentially carries the biggest asymmetric upside.
For traders who don’t want to wait until the shares hit the open market under the ticker SPCX, IG clients can participate in the IPO via IG’s SpaceX pre‑IPO market, tied to SpaceX’s expected market capitalisation.
You can read more about the SpaceX pre‑IPO by my colleague in Europe, Salah-Eddine Bouhmidi, here.
Late last week, Bloomberg reported that SpaceX is now targeting at least $1.8 trillion for the IPO, a slight adjustment from the previously reported $2 trillion figure. This recalibration came after consultations with advisers and investors. Despite IG’s SpaceX pre‑IPO market moving lower on these reports, it is still pointing to a SpaceX market cap of more than $2.3 trillion at the time of its stock market debut.
Non‑farm payrolls in focus
Turning to Friday’s all-important May non-farm payrolls report. Consensus expectations point to a gain of around 93,000 jobs for May, with the unemployment rate forecast to hold steady at 4.3%.
The US interest rates market kicks off the week pricing in roughly 14 basis points (bp) of a Federal Reserve (Fed) rate hike for December, with a full rate hike priced in for April.