Asian stock markets were mostly in positive territory Monday, with Wall Street futures also starting the week on an upbeat note as investors looked ahead to a promising corporate earnings season. Meanwhile, declining oil prices offered some relief from ongoing inflationary concerns.
On the geopolitical front, no new developments emerged in the ongoing U.S.-Iran peace negotiations, though shipping traffic through the Strait of Hormuz continued normally, with 160 vessels reported passing through from Monday to Saturday of last week.
Adding to the downward pressure on energy prices, OPEC+ agreed to boost output targets by an additional 188,000 barrels per day beginning in August, following similar increases already put in place for June and July. Brent crude slipped 0.6% to around $71.70 per barrel — near four-month lows — while U.S. crude fell 0.5% to $68.38 per barrel.
The combination of cooling energy costs and a weaker-than-expected U.S. jobs report led investors to reduce their bets on a Federal Reserve rate increase in the near term. Futures markets now put the odds of the Fed holding rates steady at its July 29 meeting at 78%.
Minutes from the Fed’s most recent meeting are scheduled for release Wednesday, which could shed light on why some board members recently took a more hawkish stance — though that shift came before the latest drop in oil prices.
Richard Yetsenga, head of research at ANZ, offered his take on the situation: “Even if you thought there was a risk the Fed might move soon, I think we’re safe at least for another month.”
He added, “Our view overall still is the Fed won’t do anything, but clearly we’ve been above target on the Fed’s preferred inflation measure for five years. There is some risk that the Fed just runs out of patience.”
With a rate hike this month looking less likely, investors are expected to turn their attention to the approaching earnings season, where the artificial intelligence boom is anticipated to drive strong profits in the technology sector.
This week features just Delta Air Lines and PepsiCo as early reporters, but Samsung Electronics is expected to make a big impression Tuesday. Analysts are forecasting an 18-fold jump in the company’s profits.
Samsung, the world’s largest memory chipmaker by sales, is projected to report an operating profit of 86 trillion won — roughly $56.35 billion — for the April through June quarter, according to an LSEG SmartEstimate.
South Korea’s stock market, which had cooled slightly last week, remains up 92% for the year as AI demand and limited supplies continue to push chip prices higher. The index added another 2.25% on Monday, while Japan’s Nikkei edged down 0.1%.
The MSCI index tracking Asia-Pacific shares outside Japan gained 0.4%. In Europe, EUROSTOXX 50 futures were flat, DAX futures rose 0.2%, and FTSE futures dipped 0.2%. S&P 500 futures gained 0.5%, while Nasdaq futures climbed 1.4%, building on a 2.1% advance from last week.
On the economic data front, the U.S. ISM Services survey is due later Monday, with analysts expecting a slight dip to 54.0 for June — still considered a healthy reading.
Several central bank officials are scheduled to speak at a European Central Bank conference later in the day, including Fed Board Governor Christopher Waller. ECB President Christine Lagarde is also set to address an audience in Paris.
New Zealand’s central bank is also meeting Wednesday, and markets are betting the bank will raise its 2.25% cash rate by a quarter of a percentage point — what would be the country’s first rate hike since mid-2023. However, the recent slide in oil prices introduces some possibility the bank could opt to hold rates steady instead.
In currency trading, the U.S. dollar index steadied at 100.880 following a dip tied to the disappointing jobs report. The euro held flat at $1.1445, just above its recent 13-month low of $1.1325. The dollar remained at 161.45 yen, not far from 40-year highs of 162.84, as traders remain cautious about potential intervention by Japanese authorities.
Gold prices were little changed at $4,177 per ounce after bouncing about 2% last week.
