Market Summary
Oil Surges as Red Sea Attacks Escalate Supply Concerns: Brent crude jumped 2% this morning to $95.90 per barrel, breaking above its 100-day moving average after Houthi forces claimed responsibility for attacks on two Saudi oil tankers in the Red Sea. The attacks have heightened fears of further disruption to global oil supplies, adding to existing concerns around the Strait of Hormuz. The move higher in oil has also reignited inflation concerns, with US Treasury yields remaining elevated as markets reassess the outlook for global interest rates.
Asian Chip Stocks Rally Despite US Tech Earnings Concerns: Asian equities advanced overnight, led by semiconductor stocks as optimism over continued AI investment supported the sector. South Korea's Kospi gained 3.82%, while Samsung Electronics and SK Hynix each rose more than 2%. However, gains faded across the region as Nasdaq futures have fallen 0.307% this morning following Alphabet's earnings, where the company announced plans to increase annual capital expenditure to around $200 billion, raising fresh concerns over the mounting costs of AI investment.
Big Tech Earnings in Focus: Alphabet became the first of the mega-cap technology companies to report results, with investors focusing more on its sharply higher AI spending plans than its earnings. Shares declined in after-hours trading, while Tesla also fell after missing profit expectations. Markets now turn their attention to earnings from Meta, Microsoft and Amazon next week, with investors looking for further clarity on whether accelerating AI spending will translate into stronger future returns.
ECB Expected to Hold Rates: The European Central Bank is widely expected to leave interest rates unchanged today as policymakers assess the economic impact of renewed geopolitical tensions and elevated energy prices. Markets are pricing just a 4.7% probability of a rate hike at today's meeting, although expectations for a September increase remain high at around 83%. Meanwhile, gold remained near recent highs at $4,127.8 per ounce following yesterday's 1.29% rally, while USD/JPY holds steady around 163.08.
Economic Calendar
- ECB Interest Rate Announcement
- Canada Retail Sales
- US Initial Jobless Claims
- Eurozone Confidence Index
Key Market Moves Today
- S&P 500 Futures: -0.23% (7,523.3)
- U.S. 10-Year Yield: +0.41bps (4.66%)
- Brent Crude: +2.31% ($96.24)
- Bitcoin: -0.36% ($65,650)
- Spot Gold: -0.06% ($4,127.8)
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