Global stocks traded near record highs as Asian shares tracked Wall Street higher after soft US jobs data eased expectations for a Federal Reserve interest-rate hike. The MSCI All Country World Index rose 0.1%, marking its seventh advance in the past eight sessions, while MSCI's Asian gauge gained 0.4%, tracking a Wall Street rally that sent the S&P 500 to an all-time high. S&P 500 futures rose 0.13% in early trade, while Nasdaq-100 futures gained 0.38%, with Japan's Topix up 0.6% and Hong Kong's Hang Seng rising 0.6%. The rally followed news that US employers had unexpectedly cut jobs in July, with hiring figures for the prior two months also revised downward. Traders trimmed the likelihood of a rate hike at the Fed's September meeting to a roughly 43% chance, down from 64% a week ago, according to swaps data compiled by Bloomberg. The weak reading strengthened bets that the Federal Reserve would hold off on raising rates, with the futures market scaling back the chance of a September move to around 44% from 67% a week ago. As per Investing.com, Friday was one of those sessions where the market did not need genuinely good news; it just needed bad news that was not bad enough to frighten the horses.
South Korean shares rose on Monday, led by major chipmakers Samsung Electronics and SK Hynix, after a Wall Street rally and weaker U.S. jobs data eased concerns over near-term Federal Reserve rate hikes. The benchmark Kospi was up 49.97 points, or 0.80%, at 6,308.74 as of 0158 GMT, after declining for seven consecutive weeks. Among major Kospi constituents, Samsung Electronics rose 0.43%, while SK Hynix gained 1.62%, with the softer U.S. labour market data supporting investor appetite for risk assets and providing a boost to South Korean technology stocks. Hyundai Motor advanced 1.77%, while sister company Kia fell 0.59%, with of the 910 stocks traded, 630 advanced and 248 declined. However, foreign investors were net sellers of South Korean shares worth 526.4 billion won ($371.75 million), limiting gains in the broader market. As per The Hindu BusinessLine, "The jobs data helped ease concerns about a rise in interest rates," said Kohei Onishi, a senior investment strategist at Mitsubishi UFJ Morgan Stanley, "That's prompting investors to rebuild positions in technology stocks."
Oil prices extended their advance amid the ongoing standoff, with Brent crude rising 0.5% to around $84 a barrel, extending a rally of more than 5% over the previous three sessions. West Texas Intermediate crude rose 0.3% to $78.44 a barrel as shipping through the vital waterway remained at a trickle. The latest revival in fuel costs raises the stakes for the US July consumer price report due Wednesday, where analysts look for a rise of 0.1% in the headline and 0.2% for the core. Michael Feroli, chief US economist at JPMorgan, noted that "Our forecast for core CPI of 0.22% is probably not quite firm enough to prompt a hike from the Fed at the September meeting, though repeated prints closer to 0.3% could do it." The geopolitical tensions over the Strait of Hormuz continue to support oil prices despite the lack of immediate agreement between Iran and Oman. WTI crude oil is holding in the $78–$79 per barrel range after rebounding from last week's lows, suggesting that markets continue to price in a residual geopolitical risk premium even as diplomatic efforts progress. Oil prices climbed due to doubts over US-Iran Strait of Hormuz shipping talks, with higher oil prices remaining a potential risk for markets because a prolonged rise in energy costs could add to inflationary pressure and complicate the outlook for interest rates.
Iran said on Sunday that a deal with Oman defining new shipping lanes in the Strait of Hormuz was in its final stages, but reiterated that the waterway would only reopen once the United States met other conditions. This represents a significant development from previous diplomatic progress, as Iran and Oman had reportedly reached an understanding on almost all issues related to future arrangements for the Strait of Hormuz. However, Iran and Oman ended weekend talks without a final agreement to reopen the waterway, as Tehran reiterated a lengthy set of demands to Washington. President Donald Trump, in an interview with Axios on Sunday, suggested the US was prepared to wait out Iran's economic strain rather than escalate militarily, following weeks of him threatening large-scale strikes on Iran before repeatedly holding back to allow room for negotiations. US Treasury Secretary Scott Bessent had suggested that an agreement could be close last week, but President Trump later said Washington was only "semi-negotiating" with Tehran and wanted to maintain economic pressure. Market analysts advise investors to remain vigilant about the evolving Middle East situation, with Ponmudi R, CEO at Enrich Money, noting that "Until a formal agreement is reached, geopolitical uncertainty is likely to keep investors cautious and limit aggressive risk-taking."
US equity markets showed strong performance amid robust earnings results, with Nasdaq futures little changed after climbing 5% last week amid a slew of upbeat earnings reports. Analysts at BofA noted that with nearly 90% of S&P 500 results in, earnings per share were up 30% on the year after excluding investment gains at Alphabet and Amazon, with a 76% EPS beat rate matched the strongest level since 2021. "AI remains the stand out, with median EPS growth of 28% versus 12% for non-AI related stocks, though consensus expects AI to slow to 16% next quarter," they said. Earnings are lighter this week but include semiconductor company Applied Materials, networking equipment maker Cisco and cloud infrastructure technology company CoreWeave. The pullback in rate risk helped Treasuries rally on Friday and saw Wall Street close at record highs, with bond yields on 10-year Treasuries a shade higher at 4.673% as markets brace for $125 billion in new issuance this week. Treasuries surrendered some of their gains caused by the jobs data, with the yield on the two-year note rising one basis point to 4.20% on Monday, after two-year yields had dropped as much as nine basis points after the jobs report before ending about five basis points lower at 4.19%.
