3 weeks ago
Global Stocks Pause Near Records as Hormuz Talks Stall, Oil Rises
People buy and sell small pieces of companies called shares in places known as stock markets.
Last Friday, the United States reported that in July the number of jobs went down by 23,000, even though experts had expected more jobs.
That might sound like bad news, but investors thought it meant the US central bank would keep interest rates steady, which can be good for stocks.
So US markets rose on Friday, and the S&P 500 finished at a new record.
On Monday, stock markets in Japan, South Korea and Hong Kong also opened higher.
But then investors became more careful, and US stocks barely moved on Monday.
A big reason is the Strait of Hormuz, a narrow waterway that many oil ships use; Iran and Oman are talking about reopening it, but no final deal has been signed.
Iran wants the United States to meet certain conditions, such as compensation, and that keeps oil prices high, around $78 to $82 per barrel.
High oil prices can make everyday things more expensive, so investors are waiting for more clarity.
In India, markets were expected to open higher at first, and then to start flat as investors stay cautious.
US stocks rallied sharply on Friday after July payrolls unexpectedly fell by 23,000 jobs, but traded little changed on Monday, pausing just below record highs.
WTI crude oil held near $78-$82 per barrel as Iran-Oman talks on reopening the Strait of Hormuz remained conditional, with Iran seeking US compensation and sanctions relief and President Donald Trump calling for compensation from Iran.
Asian markets opened higher on Monday (Nikkei 225 up over 2%, KOSPI up 1.05%, Hang Seng up 0.77%) but traded cautiously on Tuesday, with the Nikkei closed for a holiday, KOSPI recovering to flat after an early drop and the Hang Seng down 0.57%.
European equities held near record highs: the STOXX 600 posted a fourth consecutive record close on Friday but was broadly unchanged on Monday.
Indian markets, including Nifty 50 and Sensex, were expected to open higher on Monday with GIFT Nifty about 100 points above the spot Nifty close, while a flat start was indicated for Tuesday.
- Who
- Global investors and analysts, US President Donald Trump, Iran and Oman negotiators, and companies including Atlassian, Cloudflare and SpaceX.
- What
- Global stock markets paused near record highs after a rally triggered by weak US July jobs data, while elevated crude prices and unresolved Strait of Hormuz negotiations kept investors cautious and Nifty 50 and Sensex were seen opening flat.
- Where
- United States, Europe, Japan, South Korea, Hong Kong, India and the Middle East (Strait of Hormuz, Iran and Oman).
- When
- Across consecutive sessions covering Friday's US close, Monday's Asian and European trading, and Tuesday's early Asian session.
- Why
- The unexpected contraction in US July employment reduced expectations of a near-term Federal Reserve rate hike, while geopolitical uncertainty over the Strait of Hormuz kept oil prices elevated.
Optimistic View
Cautious View
Interpreting weak US jobs data
Optimistic View
The unexpected fall in July payrolls sharply reduced expectations of a near-term Federal Reserve rate hike, driving the S&P 500 to a record close and the biggest weekly gains since April.
Cautious View
The cooling labour market, downward revisions of 103,000 jobs and the lowest labour-force participation in more than five years point to weakening US economic fundamentals.
Strait of Hormuz negotiations
Optimistic View
Reports that Iran is moving closer to a conditional agreement with Oman on reopening the Strait of Hormuz suggest diplomatic progress that could ease oil prices and geopolitical risk.
Cautious View
Talks remain conditional on US compensation and sanctions relief, Iran's Revolutionary Guards have reiterated their demands, President Trump has called for compensation from Iran, and reported explosions in the strait keep a geopolitical risk premium in crude prices.
Market direction after the rally
Optimistic View
Strong earnings from Atlassian, Cloudflare and SpaceX, plus a weekly SOXX ETF gain of more than 7%, suggest the technology and semiconductor rebound is durable.
Cautious View
US stocks turned little changed on Monday and technical analysts describe range-bound, indecisive trading, with investors unsure whether the recovery is durable or merely a pause.
Key facts
- US July jobs change
- Shed 23,000 jobs vs. expected gain of 83,000
- US unemployment rate
- 4.1% (edged down)
- May-June payroll revisions
- Combined 103,000 jobs erased
- US markets Friday
- S&P 500 +0.62% (0.68% also cited), Nasdaq +1.30%, Dow +0.28%
- US markets Monday
- Dow -0.11%, S&P 500 -0.06%, Nasdaq -0.32%
- Weekly US gains
- S&P 500 +3.58%, Nasdaq +5.19%, Dow +2.96% (biggest since April)
- WTI crude oil
- $78-$82 per barrel; gained about 9% over three sessions
- GIFT Nifty
- About 100 points above spot Nifty close (Monday); around spot close (Tuesday)
Quotes
Shrikant Chouhan, Head Equity Research at Kotak Securities
Head of Equity Research at Kotak Securities
“Despite the supportive opening, investor focus remains firmly on the evolving situation in the Middle East. Reports suggest Iran is moving closer to an agreement with Oman on the reopening of the Strait of Hormuz, although negotiations remain conditional, with Tehran reportedly seeking U.S. compensation and sanctions relief as part of any final arrangement. Until a formal agreement is reached, geopolitical uncertainty is likely to keep investors cautious and limit aggressive risk‑taking.”
livemint.com
“We believe that the short-term market outlook remains positive, but a fresh uptrend rally is possible only after the dismissal of 24,700/79100. Above this level, the market could move up to the 200-day SMA (Simple Moving Average) or 24,800-24,850/80000-80200. Further upside could continue, lifting the market to 25,000-25,100/80600-80900.”
livemint.com
Ponmudi
Chief Executive Officer of Enrich Money
““Indian equity markets are expected to trade with a cautious bias as uncertainty surrounding U.S.-Iran negotiations over the reopening of the Strait of Hormuz continues to weigh on global risk sentiment.””
livemint.com
Sources
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