Global stocks edged higher on Monday as investors took some comfort from signs that Iran and Oman were nearing an agreement on new shipping routes through the Strait of Hormuz, while attention shifted to key US inflation data due later in the week.
The Stoxx 600 rose 0.1%, while futures for the S&P 500 and Nasdaq gained 0.2% and 0.4%, respectively. Asian markets also advanced, with Japan’s Nikkei rising 2.1% and South Korea’s benchmark gaining 0.7%.
Brent crude was broadly unchanged at $83.50 a barrel as investors assessed the potential impact of developments around the Strait of Hormuz, a critical route for global oil shipments. Iran said an agreement with Oman on new transit lanes was nearing completion but maintained that broader access to the waterway would depend on actions by the United States.
Oil prices remained well below their late-April peak of more than $126 a barrel, easing some pressure on global inflation expectations. Markets have been particularly sensitive to energy prices because a sustained rise in crude could complicate efforts by central banks to reduce interest rates.
Investors were also responding to weaker-than-expected US employment data released last week, which reduced expectations for further Federal Reserve rate increases. Markets were now pricing in about a 45% probability of a September rate hike, down from 67% a week earlier.
Attention has shifted to US consumer inflation figures due on Wednesday. Economists expect annual consumer price inflation to have slowed slightly to 3.4% in July from 3.5% in June, while core inflation is forecast to ease to 2.5% from 2.6%.
Corporate earnings have also supported global equities. With nearly 90% of S&P 500 companies having reported results, earnings per share were up about 30% from a year earlier. The proportion of companies beating earnings expectations reached 76%, matching the strongest level since 2021.
US Treasury yields edged lower, with the 10-year yield falling to 4.643%, as investors prepared for $125 billion of new government debt issuance this week.
Currency markets were relatively stable, although the dollar rose 0.4% against the yen to 158.48. Investors remained cautious about possible Japanese intervention after recent efforts by the United States and Japan to support the weakened yen.
The Bank of Japan also signalled growing concern about inflation, strengthening expectations that it could accelerate interest rate increases as early as September.
Markets are now focused on the US inflation report, which could determine the direction of interest rate expectations and provide the next major catalyst for global stocks, bonds and currencies.
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Emmanuel Abara Benson is a business journalist and editor covering artificial intelligence, global markets, and emerging technology.
He has previously worked with Business Insider Africa and Nairametrics, reporting on finance, startups, and innovation.
His work focuses on AI, digital economy, and global tech trends.
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