Morning Bid: Markets are waiting '9 to 5'

A look at the day ‌ahead in European ​and ​global markets from Ankur Banerjee

A holding pattern in global markets has emerged as traders await earnings from Nvidia that will be a test ‌of confidence in the AI trade while rising hopes of supplies ⁠moving through the Strait of Hormuz pushed oil prices lower in a reprieve for bond yields.

Brent ‌crude futures fell for a ‌third straight day on Wednesday, sliding more than $2 to $86.22 per barrel after Iran said it had restarted talks with neighbour Oman to manage the Strait of ​Hormuz amid heightened economic pressure from U.S. President Donald Trump. [O/R]

The rising optimism in the face of little evidence of immediate relief to supply challenges suggests ⁠investors are setting themselves up, yet again, for disappointment.

Commodity vessel transits through the Strait of Hormuz hit their ​lowest level in three months, underscoring the supply constraints facing the world due to the nearly six-month long conflict.

Then there's Wednesday's main ​event, second-quarter results from Nvidia, the poster ‌child of the AI frenzy. Over the previous 12 quarters, its market value has swung by an average 7.4% following its ⁠earnings report. This time, options traders are pricing in a less manic reaction — only a $280 billion or 5.4% move in Nvidia's market value after it reports.

The U.S. dollar was steady ⁠ahead of U.S. PCE inflation data later in the day and Jackson Hole over the weekend, ​as traders await cues for the monetary policy outlook. Markets have been grappling with the U.S. Treasury department's move to buy back bonds to help cap a surge in long-end yields.

The ‌move to calm the bond market has piled pressure on the dollar, catapulting spot gold and bitcoin near three-month highs ‌as the "debasement trade" persists.

And finally, we end with the sad news that country music legend ⁠Dolly Parton died on Tuesday ‌in Nashville. She was 80.

Key ​developments that could influence markets on Wednesday:

• U.S. PCE data

• UK CBI distributive trades for August

(By Ankur Banerjee in Singapore; Editing by ‌Sonali Paul)

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