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Oil held gains and Asian stocks were set to track Wall Street lower after the standoff between the US and Iran intensified, raising concerns that disruptions to energy supplies could accelerate inflation.
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(Bloomberg) — US stocks struggled for direction as traders refrained from taking on risk on a busy day that kicked off with Wall Street earnings. Kevin Warsh’s testimony before Congress and inflation data are due later.
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or View more offersArticle contentS&P 500 futures fluctuated. Technology stocks got a lift, with South Korea’s memory giants rebounding and Nasdaq 100 contracts rising 0.5%. Brent crude climbed above $86 a barrel to the highest level in a month as the US and Iran grew increasingly hostile over the status of the Strait of Hormuz. International Business Machines Co. slumped in premarket trading on a revenue miss.
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Higher crude prices kept bets on a July US interest rate increase in place, with swap markets signaling a nearly 40% chance of a hike when the Federal Reserve meets later this month. The yield on two-year UK gilts touched the highest level since May. Treasuries edged higher and the dollar fell.
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Article contentThe event-filled calendar began with a mixed reaction to Goldman Sachs Group Inc., JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co.’s earning. Citigroup Inc. is also due to report before the US market opens.
Article contentJune consumer price data is expected to show some relief after inflation accelerated rapidly from March through May. Federal Reserve Chair Warsh is scheduled to testify before House members hours later.
Article content“Geopolitics on the margin is a negative, but the oil price has not spiked dramatically,” said Richard Flax, chief investment officer at Moneyfarm. “I expect Warsh will give a sort of data-driven speech rather than say too much about forward guidance. For us, it’s more about the inflation data.”
Article contentIn Europe, Ericsson AB’s shares fell as much as 10% after warning that margins in its main networks business will come under pressure. The Stoxx 600 slid 0.4%, dragged down by the travel and leisure sector, alongside weakness in media and retail shares.
Article content Story continues below This advertisement has not loaded yet, but your article continues below. Article contentMoney markets see at least one Bank of England and one European Central Bank rate hike this year, while leaning strongly toward a second in December.
Article contentIn a sign of confidence that the artificial-intelligence buildout will keep on fueling demand for chips, people familiar said Samsung Electronics Co. is exploring a potential offering of American depositary receipts. Semiconductor stocks bounced in early US trading after Monday’s rout.
Article content“This suggests that the Nasdaq could break its short-term negative correlation with the oil price, and rise alongside energy prices if this continues,” wrote Kathleen Brooks, research director at XTB.
Article contentWhile economists surveyed by Bloomberg expect the consumer price index to notch its first monthly decline since the onset of the pandemic in 2020, the trajectory could reverse if the current bump in crude is sustained. The annual reading is expected to remain far above the Fed’s target of 2%.
Article contentIn an escalation of the standoff between the US and Iran over the Strait of Hormuz, President Donald Trump reinstated the blockade of Iranian ships transiting the waterway and demanded a 20% reimbursement for all other cargo. US forces also completed another round of strikes against the Islamic Republic.