Equities hit record highs as hopes grow of Hormuz reopening

Good morning

Well my first day back was a quiet one, other than catching up with a few things over the couple of working days I was off.  Majors stayed in a tight range, no sign of further intervention in Yen.  US equities hit record highs as Trump refrained from threatening to attack Iran, which also helped oil drop to it’s lowest levels for three weeks.  Asian markets were positive overnight with Japan’s Nikkei up over 3.5%, and we’re expecting to see European markets open on a firmer footing this morning.   

Since then Trump has reportedly mentioned hitting Iran hard if a deal isn’t made but Iran are playing it clever, saying any agreement to open the Strait of Hormuz will be delayed as long as the US continue to threaten Iran.  In addition it has also been reported that Yemen’s Houthis have attacked a Saudi oil tanker in the Red Sea, it is interesting that oil has barely wavered on this news, instead eyes are firmly fixed on whether a deal for Hormuz can be struck.

The higher oil prices we’ve seen in the last few months has been a pain for many but of course there are those enjoying it.  BP made nearly $6bn in Q2 2026, more than doubling the profit seen in the same quarter last year.  As always, I have no problem with firms making profits, that’s what it is all about, but this is surely bordering on unreasonable.  And of course, let’s not forget the people who have made money each time Trump speaks with ‘clever market positioning ahead of his announcements.  Life just isn’t fair.    

In currencies, the US dollar is a touch weaker against most majors despite comments from Feds Schmid that tighter monetary policy is needed to control worrying inflation levels.  GBPUSD and EURUSD are currently 1.3460 and 1.1540.  USDJPY has been pretty stable, holding within a few pips of 157.50 as traders remain wary of selling yen with so much focus on intervention.  US TrsSec Bessent has intimated a BoJ rate rise is on the cards for the next meeting which may offer a degree of support for Yen.  

NZD came under a bit of pressure overnight as weaker employment numbers were released, the unemployment rate ticked up to 5.6%, the highest for over ten years.  GBPNZD is 2.2950, up nearly 150 pips from pre-release levels, while AUDNZD pushed around 50 pips higher to just above 1.2000. 

This time next week, 12^th August, will be a rare event for many, with a solar eclipse taking place and while UK is not on the path of totality, we could get up to 95% coverage although you’ll have to be in the extreme south west of the country to get that.  I remember being ridiculed for taking a day’s holiday back in 1999 to watch the last decent solar eclipse in the UK, this one comes in the evening so we can all enjoy it without fear of ridicule.

In other space news, an old SpaceX Falcon rocket travelling at over 5,000mph is likely to have crashed into the moon this morning, the impact should be able to have been seen through decent telescopes here on earth and is likely to leave a crater nearly 30 27 metres across and 5 metres deep.  We’re still waiting for pictures to emerge of the impact and the resulting debris.  This follows a similar impact by a Chinese rocket back in 2022 and highlights the risk of building infrastructure on the moon with so much debris floating around in space.

US data today includes ADP employment and ISM services PMI although while these may be market-moving, I think many are waiting for the main event, the nonfarms, on Friday.  Aussie trade data is due overnight.  We are used to this running in surplus although March and May were both in negative territory, the previous down month was way back in Dec 2017.  We are expecting to see another down month this time around, at some point this must surely put AUD under more pressure.  GBPAUD currently 1.9110.

Have a great day…

-  09.00 EU composite PMI

-  10.00 EU PPI

-  13.15 US ADP employment

-  14.45 US S&P composite PMI

-  15.00 US ISM services PMI

-  21.05 Feds Cook speaks

-  02.30 AUS trade balance