Asian equity markets edged higher on Monday, tracking Wall Street’s positive momentum after a soft U.S. employment report lowered expectations of near-term interest rate hikes. Meanwhile, crude oil prices ticked upward as uncertainty persisted over shipping lanes in the Gulf.
Asian Stocks Track Wall Street Record Highs
The retreat in interest rate expectations sparked a late-week rally in U.S. Treasuries, driving Wall Street benchmarks to fresh highs. Following this lead:
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Japan’s Nikkei 225 rose 0.6%.
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South Korea’s KOSPI gained 0.5%.
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MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.3%.
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European equity futures traded slightly lower, with EUROSTOXX 50 and DAX futures dipping 0.1%, and FTSE futures down 0.4%.
Oil Prices Rise on Strait of Hormuz Standoff
Crude oil prices ticked up following limited progress in Gulf diplomatic talks:
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Brent Crude rose 0.9% to $84.32 per barrel.
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U.S. WTI Crude gained 0.7% to $78.74 per barrel.
Iranian officials stated that an agreement defining new shipping channels in the Strait of Hormuz via Oman was near completion, but reiterated that full reopening remains contingent on the U.S. meeting additional conditions. Consequently, commercial shipping through the critical waterway remains severely restricted.
Fed Interest Rate Expectations & Upcoming Inflation Data
The resurgence in energy costs places added scrutiny on the upcoming U.S. July Consumer Price Index (CPI) report. Consensus estimates project a 0.1% increase in headline inflation and a 0.2% rise in core CPI.
“Our forecast for core CPI of 0.22% is probably not quite firm enough to prompt a hike from the Fed at the September meeting, though repeated prints closer to 0.3% could do it.”
— Michael Feroli, Chief U.S. Economist at JPMorgan
Futures markets have trimmed the probability of a September Federal Reserve rate increase to ~44%, down from 67% last week.
Corporate Earnings & Market Key Drivers
Strong corporate results have underpinned market sentiment:
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Nearly 90% of S&P 500 companies have reported earnings, showing a 30% year-over-year EPS growth (excluding investment gains from Alphabet and Amazon), with a 76% beat rate.
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Artificial Intelligence (AI) leadership: AI-centric firms delivered a median EPS growth rate of 28%, compared to 12% for non-AI stocks.
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Key earnings to watch this week: Applied Materials, Cisco, and CoreWeave.
In currency and fixed income markets, 10-year Treasury yields hovered around 4.673% ahead of $125 billion in upcoming U.S. debt issuance, while spot gold held firm at $4,342 per ounce.
