United States Swims in Natural Gas While Global Markets Gasp for Supply

Asian stock markets opened higher on Monday, taking cues from Wall Street’s latest gains after weaker-than-expected US employment data reduced expectations of an immediate increase in borrowing costs. However, rising oil prices and uncertainty surrounding developments in the Gulf limited the overall optimism in financial markets. Investors were also closely monitoring the situation around the Strait of Hormuz, a crucial route for global energy supplies, after Iran said discussions over the reopening of the strategic waterway were nearing an agreement. Iran announced on Sunday that negotiations with Oman on establishing new shipping routes through the Strait of Hormuz had reached their final stages. Tehran, however, maintained that normal traffic through the waterway would resume only after the United States fulfilled additional conditions. The uncertainty surrounding the route kept pressure on crude markets. Brent crude futures increased 0.9% to $84.32 a barrel, while US West Texas Intermediate crude gained 0.7% to $78.74 per barrel. The latest increase in energy prices has added another layer of uncertainty for investors ahead of the release of US inflation figures. US Inflation Data in Focus Market participants are now turning their attention to the US consumer price index report scheduled for Wednesday. Economists are expecting headline consumer inflation to rise by 0.1%, while core inflation, which excludes food and energy costs, is projected to increase by 0.2%. A stronger-than-expected inflation reading could revive concerns that the Federal Reserve may be forced to keep interest rates higher for longer and potentially consider another rate increase at its September meeting. Michael Feroli, chief US economist at JPMorgan, said his forecast for core inflation at 0.22% would probably not be sufficient on its own to trigger a rate increase in September. However, he cautioned that repeated monthly increases close to 0.3% could change the outlook. Feroli also highlighted the possibility of a rebound in prices of core goods after they declined for two consecutive months, saying this would be an important factor for markets to monitor. Expectations for a September rate increase have weakened significantly in recent days. Futures markets now indicate roughly a 44% probability of a rate move in September, compared with about 67% a week earlier. Asian Equities Follow Wall Street Higher The decline in expectations for an immediate increase in US interest rates helped US Treasury bonds rally on Friday and supported a strong performance by Wall Street equities. The positive momentum carried into Asian trading on Monday. Japan’s Nikkei index climbed 0.6%, while South Korea’s benchmark market gained 0.5%. MSCI’s broad index of Asia-Pacific shares excluding Japan also advanced 0.3%, reflecting improved investor sentiment across regional markets. The gains came as traders continued to assess the impact of softer US employment data on the Federal Reserve’s monetary policy outlook. Lower expectations for interest-rate increases generally support equities because cheaper financing conditions can encourage investment and improve corporate earnings prospects. European Markets Show Caution European markets were less enthusiastic, with futures pointing to modest declines at the start of trading. EUROSTOXX 50 futures and Germany’s DAX futures each slipped 0.1%, while FTSE futures were down 0.4%. In the United States, S&P 500 futures declined 0.1%, while Nasdaq futures remained largely unchanged. The subdued futures performance followed a particularly strong week for US technology stocks, with the Nasdaq gaining around 5% amid a series of encouraging corporate earnings reports. Strong Corporate Earnings Support US Stocks Corporate earnings have remained a major source of support for US equities. According to analysts at Bank of America, nearly 90% of companies in the S&P 500 had reported their results, with earnings per share rising approximately 30% year-on-year after excluding investment gains recorded by Alphabet and Amazon. The proportion of companies exceeding earnings expectations also remained unusually strong. Around 76% of reporting companies beat analysts’ earnings-per-share estimates, matching the highest level recorded since 2021. Artificial intelligence-related businesses continued to stand out among the strongest performers. Bank of America analysts said companies linked to AI had recorded median earnings-per-share growth of around 28%, compared with approximately 12% for businesses without a direct AI connection. However, analysts expect the pace of AI-related earnings growth to moderate in the coming quarter, with consensus forecasts pointing to growth of around 16%. Investors will have fewer major earnings releases to digest this week, although several important technology companies are scheduled to report results. These include semiconductor manufacturer Applied Materials, networking equipment company Cisco and cloud infrastructure provider CoreWeave. Bond Yields and Dollar Remain in Focus In the bond market, the yield on the benchmark 10-year US Treasury note edged slightly higher to 4.673%. Investors are also preparing for approximately $125 billion in new US government debt issuance during the week, which could influence Treasury yields and broader financial-market conditions. The recent decline in bond yields, combined with improving appetite for riskier assets, has placed pressure on the US dollar. The euro remained close to a seven-week high at around $1.1557. Meanwhile, the dollar was little changed against the Japanese yen at approximately 157.85. Currency traders remain cautious about the possibility of intervention by Japanese authorities if the yen weakens further. Japan has previously expressed concern over sharp and rapid movements in its currency, particularly when excessive weakness threatens to increase import costs. Gold Holds Near Record Levels Gold also remained firmly supported as lower bond yields improved the appeal of the non-interest-bearing precious metal. Spot gold was trading around $4,342 an ounce after recording a gain of more than 7% during the previous week. The metal continues to benefit from a combination of factors, including expectations surrounding US monetary policy, movements in Treasury yields, currency fluctuations and geopolitical uncertainty. With investors awaiting US inflation data and closely watching developments around the Strait of Hormuz, markets are likely to remain sensitive to changes in energy prices and interest-rate expectations in the days ahead.

Gold prices extended their upward momentum on Tuesday, climbing for a third consecutive session as investors turned their attention to key US inflation figures that could influence expectations for the Federal Reserve’s next interest-rate decision. The precious metal continued to attract buying interest amid renewed safe-haven demand and growing expectations that US monetary policy could become less restrictive if economic data point to a cooling economy. Spot gold gained around 1% to reach $4,432.74 per ounce by 0217 GMT, its highest level since June 5. US gold futures also advanced, rising 1.7% to $4,492.60 per ounce. Market analysts said several factors were contributing to the latest rally, including investors who had stayed on the sidelines during gold’s earlier decline and are now returning to the market as prices recover. IG market analyst Tony Sycamore said the move was partly being driven by a fear of missing out among investors who had failed to take advantage of the previous decline toward the $4,000 level. He also pointed to short-covering by speculative traders and renewed demand for gold as a safe-haven asset. Sycamore added that gold could have further room to advance over the medium term, potentially opening the way for a stronger recovery toward the $5,000-per-ounce mark. US inflation data in focus Investors are now closely watching the latest US inflation figures, with the consumer price index (CPI) scheduled for release on Wednesday and producer price data due on Thursday. The reports are expected to provide important clues about the future direction of US interest rates. Markets have already reduced expectations for further monetary tightening following weaker-than-expected US employment data released last week. The latest jobs figures raised concerns about the strength of the US economy and encouraged traders to reassess expectations for the Federal Reserve’s policy path. At its July meeting, the Federal Reserve left interest rates unchanged, although three policymakers dissented and supported an increase. The split among officials highlighted uncertainty over the appropriate direction of monetary policy as the central bank continues to balance inflation risks against signs of economic weakness. Gold generally benefits from a lower-interest-rate environment because the metal does not provide interest or other regular income. When bond yields and interest rates decline, the opportunity cost of holding non-yielding bullion becomes less significant, potentially increasing its appeal among investors. Fawad Razaqzada said that if incoming economic data continue to indicate a slowing US economy without a significant acceleration in inflation, financial markets could further reduce expectations for tighter monetary policy. Such a development could weigh on the US dollar while creating a more supportive environment for gold, he said. Geopolitical tensions add to safe-haven demand Geopolitical developments also remained an important factor in precious-metals markets. US President Donald Trump responded to Iran’s conditions for a potential peace agreement with demands of his own, including calls for compensation over people killed during wars, attacks and protests. The exchange has added uncertainty to diplomatic efforts aimed at resolving the conflict and reopening the Strait of Hormuz, a strategically important waterway for global energy shipments. Any prolonged disruption or renewed tensions around the Strait could increase concerns over global energy supplies and economic stability. Such uncertainty often encourages investors to seek traditional safe-haven assets, including gold. Analysts are therefore watching both economic indicators and geopolitical developments for signs that could influence bullion prices in the coming sessions. Other precious metals also gain Gold was not the only precious metal to advance during Tuesday’s trading. Spot silver increased by 0.9% to $66.30 per ounce, maintaining its recent strength. Platinum also moved higher, gaining 0.7% to $1,765.26 per ounce. Meanwhile, palladium rose 0.8% to $1,394.00 per ounce. With US inflation figures due later in the week, traders are expected to remain cautious while assessing whether the latest economic data will reinforce expectations for a shift toward easier monetary policy. For gold, a combination of softer US economic indicators, a potentially weaker dollar, lower interest-rate expectations and continued geopolitical uncertainty could provide additional support to prices in the near term.