Morning Bid: The most violent ceasefire

By Mike Dolan

What matters in U.S. and global markets ‌today

By Mike Dolan, Editor-At-Large, ​Finance and Markets

With ​TV screens dominated by all the hoopla surrounding Spain’s World Cup victory this weekend, some may have failed to notice that the Iran conflict appears to have descended into a full-blown war once again. The US has hit Iranian targets for the ninth ‌straight day as Tehran has retaliated against U.S. bases and Gulf shipping, Iranian attacks have now killed at least three ⁠U.S. soldiers.

Traffic through the Strait of Hormuz has slowed to a trickle, and Brent crude rose back above $90 per barrel on Monday for the first time since early June before paring ‌these gains.

I’ll get into all that and more ‌below.

But first, listen to the latest episode of the Morning Bid daily podcast about the energy crisis you should be focusing on, the big moves in chip stocks and the changes at both 10 and 11 Downing Street. Subscribe to hear Reuters journalists discuss the biggest news in ​markets and finance seven days a week.

THE MOST VIOLENT CEASEFIRE

Given the uptick in violence in the Middle East, it’s little wonder that there was so little positive reaction to the relatively benign June inflation reports last week. The futures market thinks there’s a two-thirds chance the Fed will pull ⁠the trigger on higher interest rates by September.

Shaky stocks are adding another big cloud to the horizon. South Korean markets were closed on Friday, but the chip selling resumed today, with the KOSPI down ​another 3%. Stocks elsewhere were calmer first thing, as Tokyo was on holiday.

While U.S. futures are up slightly before the bell, this follows a rough few weeks for tech stocks. High-flying U.S. chip stocks were down 10% last week ​and 20% from their nosebleed record highs in June, suggesting the market may be ‌sobering up from the AI frenzy. It’ll now turn its eyes to the big hyperscaler earnings out this week and next. First up is Alphabet, which reports on Wednesday, with the likes of Intel and Tesla also out this week.

Meanwhile, ⁠China’s latest AI development from its Moonshot programme offers a glimpse at how the world’s second-biggest economy is keeping pace with the rapid tech transformation.

Finally, in the UK, Andy Burnham finally takes over as UK Prime Minister on Monday. The market will be keenly interested in his cabinet picks and choice of finance minister, with relatively conservative Home ⁠Secretary Shabana Mahmood expected to get the nod.

CHART OF THE DAY

Crude oil prices briefly surged back above $90 per barrel on Monday for the first time since early June as ​the Iran war raged after the ninth straight day of U.S. attacks on Iran and deadly Iranian reprisals against regional U.S. bases. Prices fell back below this mark after Iran's foreign ministry said negotiations with the U.S. could be pursued based on national interests.

Gulf shipping traffic through the Strait of Hormuz has slowed to a trickle. With fuel ‌prices rising again across the board, average retail U.S. gasoline prices - which are still up more than 30% since the start of the war - are back above $4 per gallon.

Today's events to watch

* U.S. June Leading Economic Index, Canada's ‌June inflation report

* Labour Party leader Andy Burnham formally takes office as UK Prime Minister

* U.S. earnings reports from Domino's Pizza, Steel Dynamics and WR Berkley

Want to receive the ⁠Morning Bid in your inbox every weekday morning? Sign up ‌for the newsletter here. You can find ROI ​on the Reuters website, and you can follow us on LinkedIn and X.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

(Writing ‌by Mike Dolan)

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