As the Drop in Oil Relieves Pressure on Yields, Stocks Rise – Europe Market Wrap

Stocks and bonds rose as the latest sign of easing tensions between the US and Iran pushed oil prices lower, allaying concerns about faster inflation.

S&P 500 futures added 0.5%, signaling a positive start to a week awash with key economic data and corporate earnings. Brent crude slid as much as 7.3% to $81.55 a barrel after Trump called off a planned attack on Iran. Treasuries rose across the curve, with the benchmark 10-year yield dropping 5 bps to 4.68% as it retreated from the highest level since January.

The Stoxx Europe 600 added 0.4%, led by consumer products companies and carmakers, while Asian stocks fell as South Korean chipmakers tumbled, suggesting the wild ride for AI-rated shares is not yet over. Middle East hostilities, AI valuations and inflation fears continue to dominate markets, but traders are also looking ahead to the key US July jobs report on Friday for guidance on the Fed’s policy path. SpaceX’s first earnings release since its record-breaking IPO is on Tuesday, while European heavyweights including HSBC and Novo Nordisk are also reporting.

The Yen swung from a small decline to a gain of as much as 1.4% versus the Dollar during morning trading in Tokyo, amid speculation authorities may have intervened again following coordinated action between the US and Japan last week. It then pared much of the move to trade around 156.90 per Dollar during the London session, suggesting jittery traders or algorithms may have contributed to the volatility, with the Dollar broadly falling 0.1%. Japan’s Ministry of Finance said it conducted a Yen-buying operation on July 31, US time, in coordination with the US Treasury, and wouldn’t hesitate to conduct further joint intervention.