Macro update
US inflation data: Investors are focused on June’s consumer price report due later today, with a core CPI reading of 0.3% or higher seen as increasing the likelihood of a Federal Reserve rate hike as early as July, following hawkish comments from Governor Christopher Waller that borrowing costs may need to rise again in the near term.
Oil climbs to a four-week high: Brent crude rose nearly 3% to around $84.80 a barrel after the US reinstated its naval blockade of Iran and proposed a 20% levy on cargo transiting the Strait of Hormuz, while tanker traffic through the waterway fell to its lowest level in two months.
Wall Street retreats as geopolitical tensions escalate: The S&P 500 declined 0.79% and the Nasdaq lost 1.55% as renewed US-Iran hostilities weighed on investor sentiment, with memory-chip manufacturers leading the losses and SK Hynix dropping 9.3% following its strong Nasdaq debut last week.
Asian equities move lower: MSCI’s Asia-Pacific index excluding Japan fell 1.7%, led by declines in Taiwan and South Korea, although Chinese markets proved more resilient after stronger-than-expected June trade data.
Yen remains close to multi-decade lows: The Japanese currency strengthened marginally to ¥162.30 per dollar but stayed under pressure, keeping markets alert for possible intervention after Japan’s finance minister suggested the government could adjust state pension fund allocations if market conditions change significantly.
US earnings season gathers pace: Major US banks, including JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs and Wells Fargo, are due to report quarterly results, marking the start of a closely watched second-quarter earnings season.
