Asia stocks edge higher, oil up amid Gulf confusion

SYDNEY: Asian share markets tracked Wall Street higher on Monday (Aug 10) after a soft US jobs report pared the risk of a near-term rise in borrowing costs, though a lack of progress in Gulf peace talks saw oil prices creep higher.

Iran said on Sunday that a deal with Oman defining new shipping lanes in the Strait of Hormuz was in its final stages but reiterated that the waterway would only reopen once the United States met other conditions.

Brent crude added 0.9 per cent to US$84.32 a barrel as shipping through the vital waterway remained at a trickle, while US crude rose 0.7 per cent to US$78.74 a barrel.

The latest revival in fuel costs raises the stakes for the US July consumer price report due on Wednesday, where analysts look for a rise of 0.1 per cent in the headline and 0.2 per cent for the core.

Any upside surprise could rekindle speculation about a Federal Reserve hike next month.

“Our forecast for core CPI of 0.22 per cent is probably not quite firm enough to prompt a hike from the Fed at the September meeting, though repeated prints closer to 0.3 per cent could do it,” said Michael Feroli, chief US economist at JPMorgan.

“One thing we are watching for is any rebound in core goods prices after a two-month stretch in which they fell.”

The futures market has scaled back the chance of a September move to around 44 per cent, from 67 per cent a week ago.

The pullback in rate risk helped Treasuries rally on Friday and saw Wall Street close at record highs. Japan’s Nikkei followed that lead and rose 0.6 per cent on Monday, while South Korea added 0.5 per cent.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.3 per cent.

DOUBLE-DIGIT EARNINGS GROWTH

For Europe, EURO STOXX 50 futures and DAX futures both dipped 0.1 per cent, while FTSE futures fell 0.4 per cent.

S&P 500 futures dipped 0.1 per cent, while Nasdaq futures were little changed, having climbed 5 per cent last week amid a slew of upbeat earnings reports.

Analysts at BofA noted that with nearly 90 per cent of S&P 500 results in, earnings per share were up 30 per cent on the year after excluding investment gains at Alphabet and Amazon. A 76 per cent EPS beat rate matched the strongest level since 2021.

“AI remains the stand out, with median EPS growth of 28 per cent versus 12 per cent for non-AI related stocks, though consensus expects AI to slow to 16 per cent next quarter,” they said in a note.

Earnings are lighter this week but include semiconductor company Applied Materials, networking equipment maker Cisco and cloud infrastructure technology company CoreWeave.

In bond markets, yields on 10-year Treasuries were a shade higher at 4.673 per cent with the market bracing for US$125 billion in new issuance this week.

The drop in yields and general improvement in risk had pulled the US dollar broadly lower, with the euro just off a seven-week top at US$1.1557.

The dollar was flat on the yen at 157.85, with investors still wary of intervention should they push the yen down too far.

In commodity markets, the drop in yields helped non-interest-paying gold hold at US$4,342 an ounce, having climbed more than 7 per cent last week.