GGMA Markets Briefing: Oil Rebounds as Iran Talks Are Denied, Yen Gives Back Its Intervention Gains
President Trump told reporters that negotiations with Iran were underway at the request of Tehran and the Gulf states and called it a last chance to sign a good document, but Iran's foreign ministry said no talks were taking place or scheduled and that its only discussions were with Oman over management of the Strait of Hormuz (Reuters). A cargo vessel reported being hit by an unknown projectile near the strait overnight, and six vessels transited on Monday, compared with seven the day before. Explosions were reported in Kuwait as Iran targeted an American military base (Jpost), and analysts at the Centre for Strategic and International Studies argue Tehran reads the repeated cancellation of strike threats as weakness (BBG). Crude has taken back some of yesterday’s sharp drop, Brent up 1.6% at 85.09 dollars and WTI up 1.2% at 81.27, after Brent shed roughly 7% on Monday. American equity futures are nonetheless firmer, the Nasdaq up 0.4% and the S&P 500 up 0.2%. That extends Monday's close-to-close gains, when the S&P 500 rose 0.63%, the Nasdaq 0.59% and the Dow 0.49% to a record, and a gauge of megacaps posted its best day since March. Global equities are holding just below an all-time high on the broadest measure (BBG).
Asian equities did not follow. Korean shares reversed an early gain to fall again, the Kospi 200 down 2.0%, and the regional semiconductor complex stayed under pressure in what is now a third session of violent swings around the artificial-intelligence trade rather than a settling. Japanese shares fell, the Nikkei down 0.4%, as the currency's gains faded and the bond auction soured. Hong Kong slipped 0.5% and MSCI's emerging-market gauge fell 0.6%. Against that, Australia was the standout, the ASX up 1.3% after firmer domestic data, and Chinese mainland shares recovered with the CSI 300 up 1.1%.
Yesterday's ISM release complicated the Fed's job to keep prices stable. The American manufacturing survey landed well above expectations in July, the fastest expansion in more than four years, with production jumping and the employment gauge expanding for the first time in thirty-three months. The prices component barely eased, a twenty-second consecutive month in which roughly three-quarters of firms reported paying more, and the survey commentary was unusually blunt, one manager describing pricing volatility and lead times as arguably worse than the pandemic era (CNBC).
Markets now price 16.0 basis points of tightening for the Federal Reserve's September meeting, about a 64% chance of a move, and 35.1 basis points cumulatively by December. In Korea, inflation slowed to 2.8% against a 3.0% consensus, but core edged up to 2.6%, and the central bank said cost shocks are still feeding through, which leaves an August back-to-back rise a matter of choice rather than necessity (BBG). The Bank of Japan curve carries 11.5 basis points by September, roughly a 46% chance.
In currencies, the yen gave back ground, dollar-yen up 0.27% at 157.60 after four days of gains. The market has converged on the level Japan's April and May operations failed to break as the test of whether last week's coordinated action changed anything: dollar-yen is below its two-hundred-day average for the first time since October, and net short yen positions among asset managers and leveraged funds are at their highest since 2024, so a break would risk an accelerated squeeze (BBG). Bank of America argues the authorities are determined to break the level and that failing would tell the market they have exhausted their options, while Citigroup expects the strength to prove short-lived and the pair to hold its recent range. The dollar was firmer elsewhere, the index up 0.12% at 100.012, with sterling down 0.07% at 1.3424 and the euro barely changed at 1.1508. The Korean won was steady at 1429.13 despite the equity fall.
Government bonds edged lower on both sides of the Pacific. The American ten-year yield rose 1.9 basis points to 4.69% and the two-year 1.7 basis points to 4.25% as the manufacturing survey strengthened the case for a September move. The Japanese ten-year rose 2.5 basis points to 2.86% after an auction that drew its weakest demand since May last year, with the bid-to-cover ratio at 2.56 against 3.13 at the previous sale and a twelve-month average of 3.3, and the tail widening to 0.46 from 0.2 (BBG). Investors are pressing the Bank of Japan on whether faster rate rises are the price of continued currency support. German ten-year yields went the other way, easing 5.4 basis points to 3.15%. The US Treasury also raised its third-quarter borrowing estimate to 739 billion dollars, which matters more than usual with the thirty-year having finished July at a nineteen-year high (Reuters).
In commodities, Gold rose 0.18% to 4061.57 dollars as the Iran picture muddied again, copper gained 1.1% and the industrial metals index 1.0%, while implied volatility on crude collapsed 5.8 percentage points as the market moved past the weekend's escalation scare. Iron ore went the other way entirely, touching its lowest since late June 2025 in Singapore, on seasonally weaker Chinese demand, narrowing steel-mill margins and the absence of new stimulus (BBG). Bitcoin was steady, up 0.15% at 63835.99 dollars.
On the data front, Korean consumer prices rose 2.8% in the year to July, below the 3.0% consensus and down from 3.2%, though core rose to 2.6%. Australian household spending rose 0.8% on the month against a 0.2% consensus, with the annual rate at 6.0% against 5.3% expected, and ANZ job advertisements rose 0.8% in July after a fall revised to 0.1% (BBG). Japan's monetary base fell 13.8% year on year against an expected 13.0% decline, with the end-of-period level at 557.6 trillion yen.
On the corporate tape, HSBC delivered the strongest European bank print of the season, second-quarter pre-tax profit up 60% to 10.1 billion dollars on revenue of 19.1 billion against a company-compiled consensus of 18.6 billion, with wealth revenues up 22%. It announced a buyback of up to $ 1 billion and lifted its banking net interest income guidance for the year to at least $ 46 billion (FT). Palantir rose in extended trading after raising its forecasts, while Amazon fell after its chairman disclosed plans to sell shares, having reached a 3 trillion dollar market value on Monday (BBG).
Ahead today: the US June trade balance at 14:30 CET, where consensus looks for a deficit of 73.0 billion dollars against 77.6 billion previously. At 16:00 CET we get durable goods orders, factory orders, and the JOLTS job openings survey all together. Consensus for JOLTS is 7.45 million against a prior of 7.594 million. As usual, we will keep a close eye on the quits rate, as this correlates well with wages.
Canada returns from the Civic Holiday with the June merchandise trade balance at 14:30 CET and a July manufacturing survey at 15:30 CET that consensus expects to fall by nearly three points to the edge of contraction. SpaceX reports its first results as a public company, alongside AMD, Caterpillar, Toyota, Pfizer and Merck. The print also sets up one of the largest share unlocks on record, with as much as $116 billion of stock becoming eligible for sale next month, and the week builds to Friday's payrolls (BBG).
Time Stamp: 4 August 2026, 07:23 CET