Markets Waver as Israel-Hamas Deal, China Curbs Unfold

Israel and Hamas have reached a significant agreement for a truce and the release of all hostages held in Gaza, marking what could be a major milestone toward ending the prolonged conflict. Israel Deputy Foreign Minister Sharren Haskel expressed confidence that hostages could return as early as this weekend if the deal is formally signed, noting that final details would be worked out within hours. This development represents one of the most substantial diplomatic breakthroughs in the conflict, potentially easing regional tensions that have weighed on global markets.

The hostage release agreement comes after months of negotiations and could significantly alter the geopolitical risk calculus for investors. While the immediate market reaction has been muted, the potential for reduced Middle East instability could have longer-term implications for energy markets and global risk sentiment. The implementation timeline, with expectations set for this weekend, provides a concrete framework for monitoring progress on this critical humanitarian and diplomatic achievement.

US equity futures are showing signs of wavering after hitting another record high, reflecting investor uncertainty amid the geopolitical developments. Nadia Grant of BNP Paribas Asset Management has raised concerns about a possible market correction, highlighting the delicate balance between recent market optimism and underlying economic vulnerabilities. The volatility in futures markets suggests traders are reassessing risk exposure given the simultaneous unfolding of multiple significant global events.

The market’s hesitation comes despite recent strength in equity indices, indicating that investors may be growing cautious about extending positions at current valuations. Grant’s warning about potential corrections underscores the professional investment community’s concern that markets may be underestimating the cumulative impact of geopolitical shifts and trade policy changes. This cautious sentiment is particularly notable given the record-high levels recently achieved by major indices.

China has unveiled new restrictions on exports of rare earths and other critical materials, a move timed ahead of an anticipated meeting this month between Presidents Trump and Xi. The export curbs represent an escalation in trade tensions and could significantly impact global supply chains for electronics, renewable energy technologies, and defense applications. Rare earth elements are crucial components in everything from smartphones to electric vehicles and military equipment.

Meanwhile, the United States has approved several billion dollars worth of Nvidia chip exports to the United Arab Emirates, signaling continued strategic technology partnerships in the Middle East. The approval demonstrates the complex interplay between national security concerns and commercial interests in advanced technology sectors. These competing developments—China restricting critical material exports while the US approves significant technology transfers—highlight the fragmented nature of global technology supply chains and the ongoing recalibration of trade relationships.

The timing of China’s export restrictions, coming just before the Trump-Xi meeting, suggests strategic positioning ahead of high-level negotiations. This move could be interpreted as leverage in broader trade discussions, potentially affecting everything from semiconductor manufacturing to clean energy development. The contrasting approaches to technology and materials trade between the US and China reflect deeper strategic competition that continues to shape global market dynamics.