S&P 500 index nears all-time high amid ongoing geopolitical instability

The US stock market is showing signs of resilience, despite ongoing trade and geopolitical risks. The S&P 500 index is close to the record values recorded in February of this year, despite increased international tensions and domestic political uncertainty.

At the end of the trading session on Wednesday, the S&P 500 index closed at 6,092. 16 points-less than 1% below its historical high of 6,144. 15, set on February 19. Analysts note that in the current conditions, even a slight fluctuation can lead to an update of the record.

The growth of the index was supported by shares of the technology sector, in particular, Nvidia, whose quotes jumped by 4.3%. The semiconductor manufacturer's market capitalization reached $3.77 trillion, which allowed the company to once again become the most expensive in the world, overtaking Microsoft and Apple. Investors continue to bet on the development of artificial intelligence, which supports optimism in the market.

At the same time, risks associated with trade policy remain. US President Donald Trump during the NATO summit threatened to impose strict conditions on Spain as part of a bilateral trade agreement. The reason was the refusal of the Spanish side to support the initiative to increase defense spending to 5% of GDP by 2035, which was supported by other members of the alliance.

Geopolitical tensions in the Middle East region also remain a high risk factor. The conflict between Israel and Iran has been temporarily suspended thanks to a cease-fire agreement, but the fragility of the truce is worrying. Incidents that almost disrupted the agreements within a few hours of their entry into force confirm the instability of the current situation. Negotiations between the United States and Iran are expected in the near future, the results of which are still difficult to predict.

Against this backdrop, the Stoxx Europe 600 index ended the day down 0.74%. At the same time, shares of European defense companies showed growth after news about the agreement within NATO.

The market also recorded a sharp decline in sales of Tesla in Europe. In May, deliveries of Elon Musk's electric vehicles to the EU, the United Kingdom and the European Free Trade Association area decreased by 27.9% compared to the same period last year. The reason for the drop analysts call the growth of competition from Chinese manufacturers of electric vehicles.

In the foreign exchange market, the British pound reached its highest values in the last three years. However, analysts differ in their assessments of the future prospects. According to Janet Mui, head of RBC Brewin Dolphin's analytical department, the currency's growth is largely due to the weakening of the dollar, and not the strengthening of the pound's position. At the same time, she notes that geopolitical changes may have an impact on the long-term dynamics of the British currency.