Market News

US Stocks Hit as War Escalates – Nasdaq down 2.15%
Global financial markets traded sharply lower overnight as investors continued to grapple with escalating geopolitical tensions in the Middle East and growing concerns over elevated artificial intelligence spending. A combination of rising oil prices, higher Treasury yields, and a stronger US dollar weighed heavily on investor sentiment, prompting broad-based selling across US equity markets.

Wall Street finished firmly in negative territory, with technology stocks once again leading the declines. The Nasdaq dropped 2.15% as investors continued to reduce exposure to high-growth sectors, while the S&P 500 fell 1.21%. The Dow Jones also lost ground, declining 0.97% as risk appetite…

IC – Asia Fundamental Forecast | 24 July 2026

What happened in the U.S. session?

Markets were dominated by renewed geopolitical risk, a sharp surge in crude oil prices, and risk-off sentiment across global equities rather than major U.S. macroeconomic data releases. Brent crude briefly climbed above $100 per barrel for the first time since May after attacks on Saudi oil tankers and escalating U.S.-Iran tensions raised fears of supply disruptions through key Middle East shipping routes. The jump in energy prices reignited concerns that higher inflation could keep the Federal Reserve more hawkish, pushing U.S. Treasury yields higher and weighing heavily on risk assets.

What does it mean for the Asia Session?

Asian traders should begin…

• ECB is well positioned to be vigilant for the next couple of weeks
• I don't see any hard evidence of second-round effects
• ECB will act if inflation outlook deteriorates
• Recent developments in oil markets are concerning
• Growth forecast isn't great, but I don't see a recession

The ECB left all three key interest rates unchanged yesterday, opting to assess incoming data after an extended tightening cycle. However, policymakers stressed that uncertainty surrounding energy prices remains elevated and that they are closely monitoring whether the recent rise in oil prices feeds into broader inflation pressures.

Kocher echoed those concerns, saying the ECB is "well positioned to be vigilant for the next couple of weeks" as policymakers evaluate the…

There are just a few expiries to take note of on the day, as highlighted in bold below.

They are for EUR/USD at the 1.1350 and 1.1430 levels. That being said, the expiries should not have much of any impact barring any major surprises.

The dollar is back in control again with EUR/USD dipping back under 1.1400. So, I'd pin offers at the figure level and the 100-hour and 200-hour moving averages at 1.1407-20 to be more important levels to watch in terms of price action at the moment. And that will be the upper limits to be mindful of should we get to any surprises from the euro area PMI data later.

But with markets already leaning heavily towards the ECB acting in September next, I don't see how the data today will shift the conversation…

• August consumer sentiment -29.6 vs -28.5 expected
• Prior -29.2; revised to -29.3

The German consumer climate remains gloomy heading into August as households remain cautious about spending amid more pessimism surrounding income expectations. While economic expectations may have improved (-6.3 from -8.7 previously), income expectations remain depressed (-14.5 from -12.2 previously). And the latter is still a cause of concern for German households at this stage, that especially with consumers being worried about how their finances will be impacted over the coming year.

The more cautious behaviour is also reflected in an increase in the willingness to save among households (17.0 from 13.9 previously). So, that tells a bit of the story that…

• June retail sales +1.0% vs -0.3% m/m expected
• Prior +1.2%
• June retail sales +4.2% vs +2.3% y/y expected
• Prior +3.2%; revised to +3.5%
• June retail sales (ex fuel, autos) +1.1% vs -0.4% m/m expected
• Prior +1.2%
• June retail sales (ex fuel, autos) +5.4% vs +3.2% y/y expected
• Prior +4.6%; revised to +4.9%

UK retail sales rose unexpectedly in June, with non-store retailing in particular seeing a strong surge in volume (+4.4%) on the month.

Retailers reported that sales promotions and the warm weather boosted sales of outdoor products and items such as fans. Besides that, increased sales of clothing and sports merchandise also benefitted the June figures for non-store retailers. I'm guessing England performing well in the World Cup has a lot to do with…

• ECB is in a good position to respond to surging energy prices
• We are still facing intense uncertainty
• The rate hike in June already put us in a good position from which we can monitor further developments closely
• We are seeing in the Middle East that the situation remains highly fragile
• ECB should not pre-committ to any policy moves in the meantime
• Should instead analyse the heaps of incoming data between now and the next meeting in September

The comments fit in line with the communique that the central bank put out yesterday after its latest policy decision. In case you missed it:

• ECB leaves deposit rate unchanged at 2.25%, as widely expected
• ECB's Lagarde: Recent data points to some improvement in economic activity

Lagarde herself reaffirmed…

The latest development is that Iran has rejected a ceasefire proposal from Iraq, believed to be passed on from US president Trump. The main excuse that Iran is going with this time is that the proposal fails to address the question of control over the Strait of Hormuz. Dum, dum, dum.

Iran said that they were not going to accept a "temporary deal". And so, that leaves both sides with little to nothing to work with ahead of the weekend.

Now, we've seen this sort of dance before between the US and Iran. It was the same kind of back and forth we had back in May before both sides agreed to a ceasefire deal in June. So, it's not to say that these words are binding and that both sides will be uncompromising on their positions.

But as mentioned…

The collapse of this mediation attempt removes one of the few visible diplomatic channels still operating between Washington and Tehran, reinforcing the view that a near term negotiated de-escalation is unlikely. Iran's explicit warning that it would expand the conflict to Tel Aviv and push its Houthi allies to close Bab al-Mandeb if Trump strikes Tehran directly raises the stakes around an already fragile Red Sea shipping corridor, adding to the existing Hormuz disruption. For oil markets already pricing significant supply risk, confirmation that both sides see the conflict escalating rather than de-escalating argues for the current risk premium to persist, with headline risk skewed toward further chokepoint disruption rather than…

• ICYMI - Iran rejects Trump ceasefire offer carried by Iraqi PM, NYT reports
• Gold extends slide below $4,040 support to test $4,025 as yields bite
• Asian shares slump as AI spending fears and oil spike hit sentiment, rates
• Preview - BOJ to hold next week, keep inflation overshoot warning. but see risks easing
• Trump losing patience with Iran war, in revenge mode, WSJ reports
• Singapore - MAS seen holding policy steady on July 27 as inflation stays mild, Reuters poll shows
• Japan finmin Katayama signals readiness for decisive forex action on yen
• PBOC sets USD/ CNY reference rate for today at 6.7939 (vs. estimate at 6.7795)
• Japan warns of faster cost pass-through inflation while BOJ expected to hold rates next week
• Japan composite PMI rises to 53.1 as…

ADDED: 

South Korea's financial regulator said it is moving up the start date for a higher deposit requirement on retail trading of single stock leveraged ETFs to July 31, aiming to address market volatility. The Financial Services Commission said retail investors will need to hold a cash deposit of around 30 million won, roughly $20,000, to trade these products, bringing forward a rule that had been planned for sometime in August. The move is intended to curb speculative retail trading. The approval of domestic single stock leveraged ETFs tied to Samsung Electronics and SK Hynix in late May has drawn criticism for contributing to heightened market volatility.

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The selloff reflects two distinct but reinforcing forces: a reassessment of AI…

Gold's break below the $4,040 line points to renewed downside momentum rather than a stabilising range, with the move extending to around $4,025 in Asia trading. The decline continues to reflect the same dynamic seen through this conflict, where rising oil driven inflation expectations and firmer rate bets are outweighing the usual safe haven pull of an escalating war. With the metal now trading below a level that had provided initial support, attention shifts to whether $4,000 holds as the next line of defence, or whether the rates and dollar backdrop continues to dominate price action regardless of further geopolitical escalation.

Gold's break below $4,040 confirms the rates story is still driving this market, not the war.

Summary:

• Spot…