Israel-Hezbollah Ceasefire Rattles Oil and Gold Markets
A fragile Israel-Hezbollah ceasefire shook commodity markets Friday as fighting persisted and the US dollar softened heading into the weekend.
Israel and Hezbollah struck a ceasefire agreement on Friday, triggering an immediate but short-lived drop in oil prices before trading reversed course as reports of continued shelling in Southern Lebanon emerged. WTI crude ultimately ended the session up 94 cents at $77.54, while gold slid $49 to $4,160 after an early bounce of roughly $30 failed to hold. US cash equity markets were closed for the holiday, limiting overall trading volume, with S&P 500 futures edging down 0.2%.
The durability of the ceasefire remained in serious doubt Friday, with unconfirmed reports of ongoing exchanges of fire and a drone strike in Southern Lebanon that left two people dead after the truce was announced. President Trump publicly urged Israel to honor the agreement, and Iran's foreign minister acknowledged that plans for a future meeting with US officials were in motion — a development that could carry significant geopolitical weight in the days ahead.
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In currency markets, the Canadian dollar was the session's clear underperformer, pushing USD/CAD to its highest level since November. Canada's April retail sales headline figure of +0.5% missed the +0.6% consensus estimate, but the more telling detail was a 0.7% month-over-month decline in core retail sales — the headline number propped up almost entirely by elevated gasoline prices rather than broad consumer demand.
Adding a layer of complexity to an already uncertain week, bond markets moved to price in a more hawkish Federal Reserve stance, yet most other asset classes failed to reflect that shift. Whether equity markets — buoyed in part by continued enthusiasm around artificial intelligence — reckon with the bond market's signal in the coming week remains an open question. Political uncertainty in the UK also surfaced, with multiple cabinet ministers reportedly preparing to pressure Prime Minister Keir Starmer to announce a timeline for his departure.
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