Oil prices jumped 4% amid a new wave of escalation between the US and Iran

On Friday, the Dow Jones Index (US30) rose by 0.29% (weekly: -0.36%). The S&P 500 Index (US500) gained 0.42% (weekly: +0.91%). The tech‑heavy Nasdaq (US100) closed Friday in the green at 0.33% (weekly: +0.84%). On Friday, US equity markets ended the week on a positive note, reflecting investor optimism ahead of the earnings season. The main event was the record debut of South Korea’s SK Hynix, which raised $26.5 billion in the largest listing of a foreign company in US history, with its depositary receipts jumping 12.8% above the offering price. The tech sector showed mixed dynamics: amid rising demand for AI‑related solutions, Nvidia and AMD shares rose 4% and 2% respectively, while Meta surged 6% thanks to a positive analyst report.

This week will be pivotal for financial markets, as investors will closely analyze Federal Reserve Chair Kevin Warsh’s testimony in Congress. After his appointment, markets began pricing in a more hawkish monetary policy scenario, and now traders expect signals regarding the Fed’s readiness to raise rates in September. Particular interest will center on how the current labor‑market weakness – reflected in recent jobless‑claims data – aligns with his assessment of inflation risks, which are being fueled by energy prices. Investors will also focus on the US CPI inflation report this week. Headline inflation is expected to slow below 4%, but the persistence of core inflation at 2.9% may complicate the Fed’s task. Additional clarity will come from retail‑sales and industrial‑production reports, which will show how effectively the US economy is coping with inflationary pressure and geopolitical uncertainty ahead of key Fed decisions.

The Bank of Canada (BoC) is expected to keep its key rate at 2.25% this week, continuing its wait‑and‑see approach. Analysts note the absence of any urgent need for changes: inflation risks appear contained, and the economic recovery is progressing gradually, making the current monetary policy appropriate. The Canadian dollar strengthened on Friday, rising to 1.41 per US dollar after hitting a 15‑month low of 1.425 at the end of June. This rebound was made possible by June employment data: the economy added 18,200 jobs, and the unemployment rate unexpectedly fell to 6.5%. The positive labor‑market dynamics significantly reduced expectations that the Bank of Canada would need to ease monetary policy in the near term to support the economy.

European indices closed higher on Friday. By the end of the day, Germany’s DAX (DE40) fell by 0.20% (weekly: -2.89%), France’s CAC 40 (FR40) rose by 0.15% (weekly: -2.12%), Spain’s IBEX 35 (ES35) gained 0.32% (weekly: -2.36%), and the UK’s FTSE 100 (UK100) closed up 0.24% (weekly: -1.71%). European equity markets are undergoing a correction after recently reaching record highs. The main pressure came from the tech sector: ASML shares fell 2.1%, Siemens Energy dropped 2.6%, and Infineon declined 1.3%. Market participants continue reassessing the outlook for the AI sector, questioning whether the significant speculative demand for infrastructure can transform into sustainable long‑term profitability for companies.

On Monday, crude oil prices (WTI) rose by roughly 4%, surpassing $74 per barrel and breaking a two‑day decline. The positive price dynamics were driven by a new wave of escalation between the US and Iran in the Strait of Hormuz, where an exchange of missile strikes occurred. The flare‑up in the region erased recent optimism linked to the temporary peace agreement, which had previously given the market hope for increased energy supplies. Tehran issued a statement announcing the closure of navigation through the strait until further notice, which was denied by US Central Command, but the mere fact of the incident significantly complicates prospects for diplomatic resolution.

On Friday, Japan’s Nikkei 225 (JP225) rose by 1.20% (weekly: -2.02%), China’s FTSE China A50 fell by 2.48% (weekly: -0.27%), Hong Kong’s Hang Seng (HK50) gained 0.60% (weekly: +3.29%), and Australia’s ASX 200 (AU200) closed up 0.50% (weekly: -0.14%). On Monday, sentiment across Asia‑Pacific equity markets was mostly negative amid rising geopolitical tensions in the Middle East. The exchange of military strikes between the US and Iran, linked to the conflict around the Strait of Hormuz, triggered a spike in oil prices. This raised investor concerns about intensifying inflationary pressure and potential interest‑rate hikes by global central banks. As a result, most regional markets ended the session in the red, including Japan, Australia, and China.

This week will be decisive for the Asia‑Pacific region, where macroeconomic data from China will set the tone for global sentiment. China’s GDP growth in Q2 is expected to slow to 4.4%, reflecting ongoing structural challenges in the economy, despite a projected slight acceleration in the industrial sector to 4.7%. Investors will pay close attention to retail‑sales and trade figures, as well as credit‑growth data, which should clarify the effectiveness of recent measures aimed at supporting business activity.