Headlines:
- Red Sea shipping disruption now in focus as vessels are forced to change course
- Iran says it struck US military facilities in Jordan and Bahrain
- Oil prices extend gains as disruptions in the Strait of Hormuz and the Red Sea worsen the supply outlook
- US futures nudge lower on the day, eyes on big tech earnings
- USD/JPY stays in focus after run to fresh 40-year high
- Gold analysis today as bulls are staging a major bullish reversal from yesterday
- BoJ officials see recent Yen weakness as upside inflation risk, open to raising rates faster
- UK inflation eases slightly in June but core prices keep steady
Markets:
- WTI crude up 3.5% to $87.30
- European indices hold higher; DAX up 0.3%
- S&P 500 futures down 0.3%, Nasdaq futures down 0.9%
- CAD leads, NZD lags on the day
- US 10-year yields up 1.2 bps to 4.64%
- Gold up 1.1% to $4,120
With little on the agenda in European morning trade today, the focus in markets continue to revolve around the developments in the Middle East.
In that regard, things are heating up now in the Red Sea as shipping to/from Saudi Arabia’s Jeddah port is under threat. And that is now having the potential to add to the global energy market disruption amid the Strait of Hormuz closure as well.
Oil prices are ramping up given the situation, with WTI crude now up 3.5% to $87.30 and Brent crude up roughly 4% to $94.35.
As such, we’re continuing to see bond yields push up as well with 10-year Treasury yields now at 4.64%. In Europe, 10-year yields in France are bordering on 4% – which will be the highest since the global financial crisis. Similarly, 10-year yields in Germany are keeping near 3.18% and roughly its highest since 2011.
With yields pushing up, the dollar is keeping steadier in the major currencies space. EUR/USD is lightly changed at 1.1405 with large option expiries at 1.1400 holding price action in place for now. Meanwhile, USD/JPY is also continuing to keep near 40-year highs above 163.00 as traders continue to digest the latest developments.
In the equities space, European stocks are keeping a little higher but US futures are under pressure as tech shares fail to follow up on the bounce from yesterday. S&P 500 futures are down 0.3% with Nasdaq futures down 0.9% as all eyes now turn to big tech earnings after the close today. Alphabet and Tesla will be reporting in after hours, so that will set the tone for the second half of the week – alongside bond yields, in all likelihood.
Besides that, gold is keeping rather resilient in showing a modest bounce today with price up 1.1% to $4,120. Gold buyers continue to hold the line at $4,000 this month and are eyeing a first monthly gain in five, so there’s that.
This article was written by Justin Low at investinglive.com.