Oil prices rose on Monday as markets assessed potential Gulf peace prospects, though uncertainty persisted over the reopening of the Strait of Hormuz. Iran stated that an agreement with Oman on new shipping lanes was in its final stages, but maintained that the waterway would only reopen once the United States met additional conditions. Brent crude rose 0.9% to $84.32 a barrel, while US crude gained 0.7% to $78.74, keeping commercial shipping through the strategic route severely disrupted.
Asian share markets edged higher following Wall Street's gains, which were driven by a softer US jobs report that reduced expectations of near-term interest rate increases. Japan's Nikkei rose 0.6% and South Korea's benchmark index gained 0.5%. Investor focus now turns to the US consumer price report due on Wednesday, where analysts expect headline inflation to rise 0.1% and core inflation to increase 0.2%.
"Our forecast for core CPI of 0.22% is probably not quite firm enough to prompt a hike from the Fed at the September meeting, though repeated prints closer to 0.3% could do it," said Michael Feroli, chief US economist at JPMorgan. Markets have reduced expectations for a September rate move, with futures now pricing in about a 44% chance, down from 67% a week ago, helping US Treasury bonds rally and pushing Wall Street stocks to record highs.
In corporate markets, Bank of America analysts reported that earnings per share among S&P 500 companies were up 30% year-on-year, with a beat rate of 76%. "AI remains the standout, with median EPS growth of 28% versus 12% for non-AI related stocks, though consensus expects AI to slow to 16% next quarter," the analysts said. Meanwhile, the yield on 10-year US Treasuries edged up to 4.673% ahead of $125 billion in new debt issuance, while gold held around $4,342 an ounce.