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Asia stocks hold firm as oil prices edge up in the Gulf crisis
Asian share markets followed Wall Street's lead on Monday, after a weak U.S. employment report reduced the risk of an increase in borrowing costs near-term. However, a lackluster progress in Gulf peace negotiations saw oil prices rise. Iran said?on Sunday? that an agreement with Oman to define new shipping lanes through the Strait of Hormuz is in its final stages. However, it reiterated that this waterway will only be reopened once the United States meets other conditions. Brent crude increased 0.6% to $84.04 per barrel, as the shipping volume through this vital waterway was minimal. U.S. crude climbed 0.5% to $78.56 per barrel. Fuel costs are on the rise again, raising the stakes in the U.S. consumer price report for July due Wednesday. Analysts expect a 0.1% increase in the headline figure and a 0.2% increase in the core. A positive surprise could reignite speculation about a Federal Reserve hike next month. Michael Feroli is the chief U.S. economics at JPMorgan. He said that "our forecast for core CPI at 0.22% probably isn't firm enough to trigger a Fed hike at their September meeting. However, repeated prints nearer to 0.3% might do it." We are looking for a rebound in the prices of core goods after a two month period in which they have fallen. The futures markets has reduced the probability of a move in September to around 45% from 67% one week ago. Wall Street closed at record highs on Friday as the pullback in interest rate risk helped Treasuries rally. Japan's Nikkei index followed suit, rising by 2.0%. South Korea also added 0.8%. The broadest MSCI index of Asia-Pacific stocks outside Japan grew by 0.7%. The blue chip index in China fell by 0.7% in July after data showed that consumer and producer prices inflation were lower than expected. This underscored the softness in domestic demand. GROWTH IN DOUBLE DIGIT EARNINGS In Europe, EUROSTOXX Futures and DAX Futures both remained flat, while FTSE Futures declined 0.4%. S&P futures rose 0.1% while Nasdaq's futures rose 0.3%. Nasdaq had risen 5% in the previous week after a series of positive earnings reports. Analysts from BofA reported that earnings per share had increased 30% over the previous year, even after subtracting investment gains made by Alphabet and Amazon. The 76% rate of EPS growth was the highest since 2021. In a note, they stated that "AI is still the leader, with median earnings?growth of 28 percent compared to 12% for stocks not related to AI." However, consensus expected AI to slow down to 16 percent next quarter. Analysts at JPMorgan raised their 2026 EPS estimate from $780 to $365. This represents a 35% annual increase. They also increased the price target for S&P 500 to 8,800, up from 7,800. This week's earnings are lower, but semiconductor maker Applied Materials and networking equipment?maker Cisco as well as cloud infrastructure technology provider CoreWeave all have positive results. Bond markets saw yields for 10-year Treasuries a little higher, at 4.662%. The market is bracing itself for $125 billion of new issuance. The U.S. Dollar fell sharply as a result of the drop in yields, and the general improvement in the risk environment. The euro was just a few cents away from its seven-week high at $1.1553. The dollar rose 0.3% against the yen, to 158.35. Investors remained wary about intervening if the yen fell too far. A summary of the opinions expressed at the Bank of Japan's July meeting revealed that policymakers were concerned about rising inflation, which could necessitate a more rapid pace of rate increases than expected. This strengthened arguments for an interest rate hike in September. The drop in yields has helped gold that does not pay interest to hold its $4,333 per ounce price after it had risen more than 7% over the last week. (Reporting and editing by Shri Navaratnam, Stephen Coates and Wayne Cole)
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The Strait of Hormuz suddenly becomes 'irrelevant to the US'
Wayne Cole gives us a look at what the day will bring for European and global markets. Asian stocks are mostly higher following the Wall Street rally on Friday, but European share futures are down as oil prices rise amid confusion about the Strait of Hormuz. Treasury Secretary Scott Bessent claimed over the weekend that the'strait' would become "irrelevant", as oil will eventually be redirected via pipelines. This gave analysts the impression that the White House is trying to wash their hands of this whole matter. Iran announced on Sunday that it was nearing completion of a deal to define new shipping lanes through the Strait with Oman. However, the Iranian government reiterated the fact that the waterway would not reopen until the United States had met certain conditions. This seems unlikely. The Houthis claim that they have re-initiated their attacks against the Red Sea port of Mocha. This will make shippers in the Bab el-Mandeb strait very nervous. Brent crude increased 1% to $84.38 per barrel, as the SoH is still only shipping two tankers on Friday. U.S. crude also rose 0.7% to $78.55. Markets have priced in a 44% probability of a Federal Reserve rate hike in September based on the soft U.S. employment number. However, this could change depending on the results of Wednesday's consumer price data. The median forecast is for an increase in headline prices of 0.1% and core prices of 0.2%. The July retail sales will be released on Friday. Forecasts predict a modest 0.2% increase, but there are downside risks?given that Amazon has moved its Prime Day sale from July to June this year. Wall Street futures are a little lower following a record-breaking close on Friday. Analysts at BofA stated that earnings per share had increased 30% over the previous year, even after taking out investment gains from Alphabet and Amazon. The 76% rate of EPS growth was the highest since '2021. AI stood out, with median earnings growth of 28%, compared to 12% for stocks not related to AI. However, consensus is expecting AI?to slow down next quarter, and fall below 16%. This week's earnings are lighter, but include Applied Materials (a semiconductor company), Cisco (a networking equipment maker) and CoreWeave (a cloud infrastructure technology provider). Market developments on Monday that may have a significant impact Investor confidence according to EU Sentix for August Beth Hammack, President of the Federal Reserve Bank of Cleveland, appears
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Oil prices rise in Asia amid Gulf turmoil
The Asian stock markets matched Wall Street's?higher levels on Monday, after a weak U.S. jobs data reduced the risk of an increase in borrowing costs in the near term. However, a lack progress in Gulf peace talks led to a rise in oil prices. Iran announced?on Sunday that an agreement with Oman to define new shipping lanes through the Strait of Hormuz is in its final stages. However, it reiterated that this waterway will only be reopened once the United States meets other conditions. Brent crude increased 1.0% to $84.40 per barrel, as shipping in the crucial waterway was at a crawl. U.S. crude was up 0.8% to $79.80 per barrel. Fuel costs are on the rise again, raising the stakes in the U.S. consumer price report for July due Wednesday. Analysts expect a 0.1% increase in the headline figure and 0.2% in the core. A positive surprise next month could reignite speculation about a Federal Reserve rate hike. Michael Feroli is the chief U.S. economics at JPMorgan. He said that "our forecast for core CPI at 0.22% probably isn't firm enough to trigger a Fed hike at their September meeting." We are looking for a rebound in the prices of core goods after a period in which they dropped by two months. The market for futures has reduced the probability of a move in September to 44% from 67% just a week earlier. Wall Street closed at record highs on Friday due to the 'pullback of rate risk'. Japan's Nikkei rose 2.0%, while South Korea gained 1.1%. The broadest MSCI index of Asia-Pacific stocks outside Japan grew by 0.8%. Chinese blue-chips fell 0.4% as data revealed that consumer and producer prices inflation in July came in below forecasts, highlighting the softness in domestic demand. DOUBLE DIGIT GROWTH IN EARNINGS In Europe, EUROSTOXX Futures 50 and DAX Futures both fell by 0.1% while FTSE Futures dropped 0.4%. S&P futures were unchanged, while Nasdaq's futures rose 0.2% after gaining 5% in the previous week, amid a series of positive earnings reports. Analysts from BofA stated that earnings per share had increased 30% over the previous year, after Alphabet's and Amazon's investment gains were excluded. The 76% EPS rate was the highest since 2021. They said that "AI is still the leader, with median earnings growth of 28 percent compared to 12% for other non-AI related?stocks. However, consensus expects AI to slow down to 16 percent next quarter." This week's earnings are lower, but still include semiconductor maker Applied Materials and networking equipment maker Cisco as well as cloud infrastructure technology provider CoreWeave. Bond markets saw a slight increase in yields on 10-year Treasuries, at 4.662%. The market is preparing for $125 billion of new issuance this week. The U.S. Dollar had fallen sharply as a result of the drop in yields, and the general improvement in the risk environment. The euro was just a few cents away from achieving a seven-week high at $1.1554. Investors were wary about?intervention if they pushed the yen too low. A summary of opinions from the Bank of Japan's July meeting revealed that policy makers were concerned about rising inflation, which could lead to a faster than expected pace of interest rate hikes. This boosted the case for an increase in September. The drop in yields has helped gold that does not pay interest to hold its $4,320 per ounce price after it had risen more than 7% over the last week. (Reporting and editing by Shri Navaratnam, Stephen Coates and Wayne Cole)
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China data shows that iron ore prices are downbeat despite Australian strikes
Iron ore prices were barely changed on Monday as investors considered the impact of a strike in Australia at a major hub for exporting the key steelmaking ingredient against the downbeat inflation figures from China, the top consumer. As of 0323 GMT, the most traded iron ore contract at China's Dalian Commodity Exchange was unchanged at 716 Yuan ($106.13). As of 0315 GMT, the benchmark?September ore price on the Singapore Exchange had increased by 0.21% to $95.25 per ton. On Sunday, more workers joined the strike at BHP's Port Hedland operation in Western Australia. This was the first major industrial action in a quarter century. In the six months to June, 75% of the iron ore exported from Western Australia's Pilbara region was shipped through the hub. Investors and traders are watching to see if both sides can reach a deal soon or if an escalation will affect supply. China's producer prices inflation fell more than expected in July, to the lowest level?in three months. Consumer inflation also dropped, as global energy costs retreated, despite U.S. and Israel war against Iran. Coking coal, coke and other steelmaking ingredients grew by 2.23%, and 0.67% respectively. The Shanghai Futures Exchange steel benchmarks were mostly weaker. Rebar fell?0.23%; hot-rolled coil slipped?0.03%; wire rod dropped 0.46%, while stainless steel gained 0.69%.
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Gold falls from its seven-week high as US inflation data is looming
Gold prices fell on Monday, as investors took profits following a seven-week high. Meanwhile, markets waited for new clues from U.S. inflation figures to determine the Federal Reserve's rate policy. As of 0200 GMT, spot gold was down 0.5% to $4,322.28 an ounce. After a weaker than expected?U.S. jobs data. U.S. Gold futures dropped 0.4% on Monday to $4,381.60. Gold is slightly lower as it succumbs a little to profit-taking after last week's NFP-inspired gains. This is more of a natural stabilisation than a significant shift in sentiment. I expect gold will remain above $4,300 in the near term. The U.S. economy lost jobs unexpectedly in July, and the previously reported gains in employment for the previous two months have been revised dramatically lower. The futures market then changed the odds that a rate increase would occur at the Federal Open Market Committee's meeting on September 15-16 from a more likely-than not chance to a less-than-even possibility. Gold is more attractive than income-generating assets in a low interest rate environment, since it does not earn interest. The Consumer Price Index, or CPI, will be released on Wednesday and the Producer Price Index on Thursday. Waterer said that "soft readings would make the case for a rate hold and open up a new path to further gold upside. Middle East uncertainty is a persistent risk factor as any renewed escalation in oil prices could put pressure on 'the metal. Iran has said that it is close to a final agreement with Oman, defining new shipping lanes through the Strait of Hormuz. However, the U.S. still needs to meet several conditions in order for the strategic waterway to be reopened. Silver spot fell by 0.2%, to $63.45 an ounce. Platinum lost 0.1%, to $1.742.50, and palladium dropped 1.1%, to $1.362.97. (Reporting and editing by Subhranshu sahu in Bengaluru. Ashitha Shivaprasad is based in Bengaluru.
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Australia tightens restrictions on two Northern Minerals shareholders who are ordered to divest
The Australian government has tightened restrictions on two Northern Minerals shareholders who were ordered to 'divest their shares over national security concerns,' the?miner reported. This is a further scrutiny of Chinese investment in the rare-earths developer. Northern Minerals has developed the Browns Range Heavy Rare Earths Project in Western Australia. Western governments are looking to reduce their reliance on China as a source of these minerals. The Australian Treasurer Jim Chalmers, ordered in May that six offshore shareholders of Northern Minerals divest all their shares over concerns that Chinese-linked groups were seeking to control the rare earths miner. Chalmers said it had amended interim instructions for Hong Kong Ying Tak and Real International Resources registered in the British Virgin Islands, as well as Hong Kong Qogir Trading & Service. According to the revised directions, Real and Qogir are not allowed to dispose of their shares until the proposed sale has been notified?to the Treasurer in order for him/her to confirm the buyer isn't an associated party. In May, the six shareholders were required to sell a total of 1.68 billion Northern Minerals shares by July 2 to non-associated parties. The ASX200 index had fallen 0.3% by 0026 GMT, despite the share price of Northern Minerals rising as high as 3.9%. (Reporting and editing by Sherry Jacobi-Phillips, Subhranshu S Ahu, Melanie Burton in Melbourne. Additional reporting by Rajasik Mukherjee)
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Russell: The demand for crude oil in Asia is balanced by the ROI-China.
China is doing all the heavy lifting to reduce crude oil demand in?Asia as a way to compensate for the reduced shipments of Middle East oil due the the Iran?war. The world's largest oil importer reported arriving 8.41 million barrels a day (bpd), up from a near decade-low of 7.12 mln in June, but still 24.3% less than July last year. When June and July imports combined, this gives a?average of 7.78 million bpd over the last two months. The average for the three-month period ending in February was 11,99 million bpd. This is 4,21 million bpd less. The United States and Israel launched an attack on Iran on 28 February. The conflict escalated to the point that the Strait of Hormuz effectively shut down, cutting off the waterway which carried about 20% of crude oil and refined goods in the world before the start of war. Saudi Arabia and the United Arab Emirates are two of the Middle East’s biggest crude exporters. They have been able to increase shipments outside the Strait of Hormuz. However, flows have fallen by about 5 million barrels per day. Crude exports from the Middle East are mainly destined for Asia, which is the largest importer of crude oil. However, crude arrivals in Asia have dropped significantly. According to Kpler's data, Asia imported 22.82 millions bpd of oil in July. Although this was an increase from April's 18.77 millions bpd (which was the lowest since Nov 2015), July's imports still fell by about 4 million per day compared to the average of 26,89 million per day in the three-month period prior to the onset of the 'Iran conflict'. The data shows that China's imports have dropped by about the same amount as the imports of Asia in the last two months. Price Moves China's decreased imports are partly due to price volatility. Brent futures hit a four-year peak of $126.41 per barrel on April 30 – a date when cargoes for June and July would have been scheduled. China has historically reduced imports as prices increase, but this drop is unprecedented. Analysts estimate that China's crude oil stockpile is at least 1.2 million barrels, and could even be higher. How long will China be able to balance crude oil prices in Asia? Imports from China are expected to show a slight recovery in August as the cargoes which managed to leave the Strait of Hormuz despite the short ceasefire between Iran and the United States are delivered. Kpler estimates that China's Middle East imports will reach 2.71 million barrels per day (bpd) in August. This is up from 2.43 millions bpd during July, and 1.42 million in June. Kpler estimates that China's crude oil imports in August will be 5.97 million barrels per day. This is up from 2.43 million bpd in July and the 1.42 million bpd of June, which was?the lowest ever recorded by Kpler going back to 2013. September imports will likely be more telling, since flows from the Middle East are more restricted due to the sharply reduced shipments that have returned through the Strait of Hormuz following the failure of the ceasefire agreement between U.S. president Donald Trump and Tehran. Even if recent efforts to restore vessel movement through the Strait of Hormuz prove successful, it may take several weeks before exports ramp up. China's refiners have two options: they can continue to suppress their appetite for import crude and dip into inventories or bid for cargoes coming from outside the Middle East. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X. These are the views of the columnist, who is also an author. (Editing by SonaliPaul)
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Oil prices rise on the uncertainty surrounding the reopening Hormuz
Oil prices rose Monday?on the uncertainty of a reopening the Strait?of Hormuz any time soon. Iran said a?deal with Oman?defining?new shipping?lanes? was in its final phases?but?insisted that the U.S. still must meet other conditions. Brent crude futures increased 91 cents (1.09%) to $84.46 a bar by 0056 GMT. U.S. West Texas Intermediate Crude futures also rose 61 cents (0.78%) to $78.79 a bar. Both benchmarks fell more than 7% in the last week, on the hope that Iran and Oman would soon reach a deal that would lead to the reopening of Strait of Hormuz. The Strait of Hormuz carried a fifth of the world's crude oil before the war. Iran claimed on Sunday that it was "finalizing" a deal with Oman, but reiterated that waterway access would be restored only after Washington met certain conditions. Tim Waterer is the chief market analyst for KCM Trade. Abbas Araqchi, Iran's Foreign Minister, said on Sunday that Iran and the U.S. have not begun talks. Tehran won't start any as long as Washington violates a June interim agreement. A Saudi oil plant has been attacked in a "further attack on supply". The Iran-aligned Houthis claimed they 'hit' Saudi Aramco Jazan refinery two days after 'the kingdom signed a pact of defence with Sunni Muslim friends Turkey and Pakistan to respond to the growing regional 'instability' caused by the U.S./Israeli war against 'Shi'ite Iran. Separately, ADNOC of the United Arab Emirates said that 15 of their vessels were attacked while transiting the Strait of Hormuz.
Gold drops from seven-week high as US inflation data is looming
Gold prices fell on Monday, as investors took profits following a seven-week price high. Meanwhile, markets looked at U.S. inflation figures for new clues about the Federal Reserve's rate policy.
As of 0443 GMT, spot gold was down 0.3% to $4,330.46 an ounce. After weak U.S. payrolls data, prices hit their highest level since June 17, on Friday.
U.S. Gold Futures dropped 0.2% on Monday to $4,390.60.
Gold is slightly lower after last week's NFP-inspired gains. This is more of a stabilisation than a significant shift in sentiment. I expect gold will remain above $4,300 in the short term.
The U.S. economy unexpectedly lost jobs in July, and the previously reported job growth for the previous two months was revised dramatically lower.
The futures market then changed the odds that a rate increase would occur at the Federal Open Market Committee's meeting on September 15-16 from a more likely-than not chance to a less-than-even possibility.
Gold is more attractive than other income-generating assets in a low interest rate environment, since it itself does not earn interest.
The Consumer Price Index will be released on Wednesday, and the Producer Price Index on Thursday.
Waterer said that "soft readings would strengthen the argument for a rate hold and clear a pathway for further upside for gold... Middle East unrest remains a lingering factor as any renewed escalation?that drives up oil prices could quickly pressurize the metal."
Iran has said that it is close to a final pact, with Oman, defining new shipping?lanes? between them via the Strait of Hormuz. However, the?U.S. The strategic waterway must be reopened after meeting several conditions.
Silver spot rose 0.3%, to $63.77 an ounce. Platinum gained 0.2%, to $1.748.80. Palladium fell 1%, to $1.364.55. (Reporting and editing by Subhranshu sahu in Bengaluru. Ashitha Shivaprasad is based in Bengaluru.
(source: Reuters)