Global financial markets got off to one of their calmest weekly starts in recent memory on Monday, with no major geopolitical flare-ups or new trade measures dominating headlines, as much of the world turned its attention to international soccer.
On the geopolitical front, no new progress has been reported in U.S.-Iran peace negotiations. However, the Strait of Hormuz remains partially open to shipping traffic. The United Kingdom Maritime Trade Operations reported 160 vessels passing through the waterway between Monday and Saturday of last week, including 98 tankers. While that figure remains well below the pre-war daily average of 138 transits, the gradual resumption of traffic is seen as a positive sign.
Over the weekend, OPEC+ reached an agreement to increase oil output quotas by 188,000 barrels per day beginning in August. That brings the total production increase since April to nearly 800,000 barrels per day.
Oil prices slipped following that announcement. Brent crude futures are hovering around $72.50 per barrel through December, a sign that traders believe prices have stabilized for now.
Stock markets across Asia posted modest declines, likely driven by investors locking in profits ahead of the upcoming earnings rush. The pullback comes after remarkable gains — South Korea’s primary stock index has surged nearly 90% this year, Taiwan’s market is up 62%, and Japan’s has climbed 37%.
All eyes will be on Samsung Electronics on Tuesday, when the world’s top memory chip manufacturer by sales is expected to report a stunning 18-fold increase in profits. According to an LSEG SmartEstimate, the company is forecast to post an operating profit of 86 trillion won — roughly $56.35 billion — for the April through June quarter.
On Wall Street, Delta Air Lines and PepsiCo are set to release their results ahead of the bigger earnings wave from major banks expected next week. Overall, analysts are projecting earnings-per-share growth of 25% compared to the same period last year, with semiconductor and energy companies expected to account for roughly half of that growth.
Futures tied to the S&P 500 and Nasdaq edged slightly higher after the holiday break, while European futures were little changed following solid gains the previous week.
U.S. Treasury yields dipped slightly as investors grew more confident that the Federal Reserve will hold interest rates steady at its meeting later this month, following a weaker-than-expected jobs report.
Minutes from the Fed’s most recent meeting are due out Wednesday and are expected to reflect a hawkish tone, given that nine members indicated support for at least one rate increase this year. However, that meeting took place before the recent decline in oil prices. Markets currently price in a 22% probability of rates staying unchanged at the July 29 meeting, but a 60% chance of a hike on September 16.
Fed Governor Christopher Waller is scheduled to speak in Rome later Monday. New York Fed Governor John Williams is set to appear Thursday. Those appearances come ahead of Fed Chair Kevin Warsh’s planned testimony before the House Financial Services Committee next week.
The ISM Services survey is also due Monday afternoon, with forecasters expecting a slight dip to 54.0 — still considered a healthy reading.
Key events and data releases to watch Monday include remarks from Fed Governor Christopher Waller, European Central Bank Board members Isabel Schnabel and Philip Lane, ECB President Christine Lagarde, and Riksbank Deputy Governor Anna Seim. On the data side, investors will also be watching EU retail sales and producer prices for May, German industrial output for May, and the U.S. ISM services survey for June.
