Cooler Inflation, Conflict Continues to Simmer
US inflation came in cooler than expected, easing concerns over a near-term Fed rate hike and supporting technology stocks. Equity markets generally moved higher, while oil prices eased from their peaks after President Trump abandoned his proposed 20% transit fee on ships passing through the Strait of Hormuz. Middle East tensions nevertheless remained elevated, with the US and Iran continuing to exchange strikes overnight, limiting the improvement in risk sentiment.
Wall Street ticks mostly higher as gains in tech drive growth
The S&P 500 gained +0.4% and the NASDAQ rose +1.0%, while the DOW held steady. Softer-than-expected June inflation eased concerns over a near-term Federal Reserve rate hike and supported technology stocks. IBM plunged -24.5% after issuing an earnings warning, weighing on the 30-stock DOW. Offsetting IBM on the DOW was Goldman Sachs (+8.0%), which reported earnings that beat expectations. JPMorgan Chase (+2.0%), as expected, announced second-quarter profit of US$21.2 billion, exceeding lofty consensus expectations. Meanwhile, semiconductor and cybersecurity stocks advanced as enterprise spending shifted towards AI infrastructure. Micron (+4.5%) and Nvidia (+4.2%) are expected to generate about US$700 billion in profit in 2027, but recent weakness has driven a -US$2.7 trillion loss in market value since the 22 June peak. Uber dropped -3.2% after reports emerged that it is in ‘advanced negotiations’ to acquire German-based Delivery Hero for ~US$12b. Following the cooler inflation print, yields retreated after recent days’ gains, with the US two-year yield sliding -6bp to 4.20%, while the 10-year yield fell -2bp to 4.59%.
Europe gains despite Middle East tensions, benefiting from elevated oil prices
The STOXX 600 rose +0.2% as softer-than-expected US inflation eased concerns over a near-term Federal Reserve rate hike, offsetting pressure from rising oil prices and escalating US–Iran tensions. Energy stocks, including BP (+2.3%), Shell (+1.6%), and TotalEnergies (+1.1%), each advanced as oil prices remained elevated, while airlines fell on higher fuel-cost concerns. Ericsson slumped -13.0% after weaker-than-expected quarterly sales and rising cost pressures. The UK’s FTSE 100 also finished +0.3% higher, supported by strength in major oil producers.
Asian markets higher while Australasia weaker
Asian markets were mostly higher, led by a +2.2% gain in China’s CSI 300 and a +1.4% rise in the Shanghai Composite. Japan’s Nikkei 225 advanced +0.7%, South Korea’s KOSPI gained +0.7%, and Hong Kong’s Hang Seng rose +0.5%. Australian shares finished flat for a second consecutive session, with the ASX 200 unchanged. Gains in energy and mining stocks, supported by a sharp rise in oil prices amid escalating US–Iran tensions, were offset by weakness across the major banks and consumer stocks. Metcash sank -3.9% after the retail group traded ex-dividend ahead of its final dividend. Across the ditch, the NZX 50 dropped -0.5%, weighed down by Auckland Airport (-3.3%) and Infratil (-1.9%). Skellerup rose +5.7% after raising its earnings guidance.
Oil prices continue ticking higher
WTI Crude added +1.9% to US$79.64/bbl, Gold rose +1.3% to US$4,052.35/oz, Iron Ore fell -0.4% to US$98.31/MT.