Brent crude fell below $80/bbl after Axios reported a 60-day interim deal to reopen the Strait of Hormuz. Yields fell, equities rallied to records, and the dollar held steady. ADP data and ISM services are due next.
Alpha Score of 61 reflects moderate overall profile with strong momentum, weak value, moderate quality, moderate sentiment.
Brent crude fell below $80 a barrel on Tuesday after Axios reported the US was closing in on a 60-day interim deal to reopen the Strait of Hormuz without tolls. President Trump said more clarity was expected within 48 hours. The drop, from $86 a barrel, was the sharpest single-session decline in months.
The oil slide hit energy stocks hard. The S&P 500 energy sector finished lower, but the broader index posted its strongest session since April and its first record close since June 2. Global equities extended a 15% year-to-date gain as risk premia compressed. The rally was driven not by an upgrade to growth expectations but by a removal of downside fears – reduced concerns over the Iran conflict and fading worries about the AI bubble, traders said.
Yields fell alongside oil. The 10-year Treasury yield extended Monday's decline as the deal prospect reduced inflation expectations tied to energy costs. EUR/USD held above 1.15, little changed. The Norwegian krone weakened as oil dropped. EUR/SEK traded near the 11.00 threshold, driven by overall risk sentiment, traders said.
In the US, data showed the labor market cooling gradually. June JOLTS job openings fell to 7.36 million from 7.54 million in May, slightly below the 7.40 million consensus. Hiring and voluntary quits both rose. Involuntary layoffs were unchanged. The ratio of openings to unemployed job seekers held at 1.04. The ADP private payrolls report for July, due Wednesday, will give markets an early read on Friday's nonfarm payrolls. ADP's weekly estimates have pointed to slower employment growth from June. ADP's stock, rated Moderate with an Alpha Score of 56/100, is a name to watch ahead of that data.
The Federal Reserve remained a source of cross-currents. Kansas City Fed's Schmid, a non-voter and hawk, said monetary policy is not yet restrictive given strong demand and investment, signaling that further tightening may be needed. Philadelphia Fed's Paulson, a voter and dove, pushed back against rapid rate hikes, saying policy is already mildly restrictive and that keeping rates steady in July was "not a close call."
In the euro area, final services and composite PMIs for July confirmed the upside surprise from the flash release. The services PMI came in at 51.6, up from 49.4 in June. The composite PMI hit 51.9, up from 50.0. June PPI data showed a 0.2% month-on-month increase and an annual rate of 5.9%, the strongest since March 2023.
Minutes from the Bank of Japan's June meeting showed board members increasingly focused on broadening inflation risks. Firms planned price hikes across a wide range of goods. Higher fuel costs, a weak yen and a tight labor market could add further pressure on consumer prices, the minutes said.
Danmarks Nationalbank refrained from intervening in July, even though EUR/DKK remained elevated. The central bank had intervened for 0.7 billion kroner in June, its first FX intervention in more than three years. Upward pressure on EUR/DKK eased enough for the bank to stay sidelined in July, the reserve data showed.
Trump said more clarity on the Strait of Hormuz deal was expected within 48 hours.
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