Last updated: August 7, 2026, 12:01 AM ET
US Equities: Record Highs Amid AI Resurgence and Hormuz Hopes
The S&P 500 rose 1.8% to a record, pushing past its previous peak from early June as worries about Iran and AI eased. The Dow industrials notched their 24th high of the year on strong earnings, while the Nasdaq slipped amid lingering tech volatility. Wall Street's blistering run took a breather as traders digested recent gains and monitored progress toward a Strait of Hormuz deal. A dramatic turnaround in technology stocks powered a $3.5 trillion increase in the Nasdaq 100's market capitalization in just four days, driven by strong earnings. Sentiment has turned around completely from last month's selloff, with futures climbing as the latest earnings pointed to strong AI demand. The market's gains have broadened as the AI trade falters, with traders flocking to S&P 500 calls as the rally widens. Wall Street bulls are flocking to options betting on more gains in the index, which has for months been in the shadow of the Nasdaq. U.S. stocks surged and oil fell sharply after Treasury Secretary Scott Bessent said the U.S. could reach a deal with Iran to reopen the Strait of Hormuz "today or tomorrow." Stocks finished mixed as optimism about the Hormuz reopening was offset by more volatility in AI wagers, while the Dow led declines on oil price uncertainty. The Dow was poised to break its winning streak as chip stocks slid and oil steadied amid Middle East uncertainty. U.S. stocks fell in a jittery session amid doubts about the reopening of the Strait of Hormuz, with oil prices rising on supply concerns. The Nasdaq Composite retreated after a morning rally as SpaceX slumped, while the Dow industrials advanced on the day.
European & Asian Equities: Records, Earnings, and Reform
European stocks hit a record high, boosted by another strong set of earnings, a rally in mining shares, and optimism that a Middle East truce will be reached soon. The Stoxx 600 index advanced for a fourth straight day as strong earnings boosted sentiment, with WPP Plc leading gains in the media sector. Corporate earnings drove European indexes higher in early trade, with consumer-facing stocks and healthcare leading the advance. Europe Inc. is delivering one of the strongest earnings scorecards in years, setting up regional stocks to scale fresh peaks as analysts turn more optimistic. European stocks traded steady near a record high as falls in HSBC Holdings and Novo Nordisk helped erase early gains. The region's stock market is the only major region to see a meaningful improvement in risk appetite in recent weeks, supported by fresh capital inflows. Spanish stocks offer a sunny escape for tech-weary investors, with the Ibex 35 surpassing Europe with 15% gains, though the country's relative isolation from AI may not last. UK stock futures rose on Middle East optimism as oil dipped on Iran headlines, while the pound eased on a busy earnings day.
Japanese stocks were lower in early trade as uncertainty over the Middle East conflict and energy costs persisted, with the Nikkei falling 0.7% dragged by chip-related stocks. Australia's stock benchmark climbed to a record on easing concerns over the US-Iran conflict and supportive signals in the domestic economy. India's biggest stock reform in years endured a rocky first week as traders were convinced the new auction system to set closing prices was faltering. The first weekly expiry for India's BSE Sensex Index under the new closing-price methodology passed largely without disruption, easing concerns after the mechanism's turbulent debut. However, India's first weekly derivatives expiry under the new system did little to ease concerns after the benchmark NSE Nifty 50 Index again moved sharply during the auction. Global funds are piling back into India IT stocks after selling for months, with smaller IT firms faring better than their larger counterparts during the June quarter. Chinese solar stocks were whipsawed this week by a combination of domestic efforts to end below-cost sales and renewed tariff threats from the US.
Yen Intervention: A Historic Move and Its Fallout
The US blindsided the European Central Bank last week with its historic currency intervention to help Japan, only informing Frankfurt after it sold euros to buy the yen. Christine Lagarde and Scott Bessent spoke only after Washington's historic intervention, according to the Financial Times. The US is bolstering the yen as it did with the Argentine peso, and the reasons are not solely economic. One of the most dramatic foreign exchange market interventions in decades aims to stabilize the slumping yen and stave off a larger crisis. Coordinated intervention allowed Japan to support its currency without selling off its US debt holdings, a currency trader at heart. The US Treasury cites the 1998 yen rally as precedent for the intervention, while Japan and the US confirmed the historic joint intervention in the currency market.
The yen is heading into the end of the week having surrendered nearly half of its intervention-driven gains, fueling speculation among traders that authorities may step into the market again. The way the yen trade is being done should make us worry that the Federal Reserve is being roped into easing monetary conditions. Only the Bank of Japan can arrest the yen's decline, as higher interest rates are needed to address a growing yield gap with the US. The wide impact of the US intervention shows the extent to which global markets revolve around investments in artificial intelligence. Japan vows further action with Washington if needed, while the yen is expected to strengthen about 6% against the dollar by year-end following the coordinated intervention, according to Bank of America. Traders are rushing to hedge against swings in the dollar ahead of Friday's payroll numbers as Fed Chairman Kevin Warsh leaves Wall Street guessing at his next move. A rarely used Federal Reserve liquidity facility saw no activity last week, suggesting Japan didn't use the tool in its latest effort to support the yen.
Currencies: Dollar, Won, Peso, and Carry Trades
The dollar finished its best day in two weeks as oil prices advanced amid fading optimism over easing tensions in the Middle East. The WSJ Dollar Index fell 0.2% — down six of the past seven trading days, while the index edged lower again, down five of the past six days. The US nonfarm payrolls report due out Friday could shape the dollar's next move, with Asian currencies consolidating ahead of the data. The South Korean won rose to the strongest level in almost 10 months as exporters converted their dollar earnings into the local currency. The Colombian peso continues to be the best performing currency in emerging markets as investors shrug off the central bank's efforts to slow the currency's rally. Emerging-market carry trades, some of this year's most popular foreign-exchange bets, are showing resilience even after joint US-Japan currency intervention dented the appeal of this yen-funded strategy. Most emerging-market currencies gained on Tuesday, rebounding from an earlier selloff amid optimism the US and Iran are nearing a deal. The cost of hedging against rand declines has fallen to the lowest level this year as investors bet gyrations spurred by the Middle East conflict will ease.
Fixed Income: Treasuries, Bonds, and the Fed
Treasury yields rose ahead of Friday's payrolls report as job-cut plans remained calm in July alongside low weekly jobless-claims figures. Yields edged slightly lower after weaker-than-expected private payrolls data, with the market awaiting the BLS employment report. Treasuries rose on Tuesday as signs of progress toward a diplomatic resolution of the Iran war sent oil prices lower, curbing expectations for more than one Fed rate hike. Treasury yields cooled amid a busy day of economic indicators and ahead of Friday's employment report. Global yields are moving higher, supported by firmer oil prices as optimism over a reopening of the Strait of Hormuz fades, OCBC said. Bond traders have been spending millions of dollars to guard against sharp declines in long-dated Treasuries that risk igniting a bigger bout of volatility in the $31 trillion market. The US Treasury retained its previous guidance for future debt issuance, signaling no change in note and bond auction sizes well into 2027 even as federal borrowing needs climb. Bond dealers expect the US will avoid signaling auction increases just yet, even though the Treasury will need to increase the sizes of some fixed-rate borrowing programs next year.
Alphabet Inc. has received about $115 billion of orders for its latest jumbo bond sale, signaling renewed investor appetite for debt tied to the artificial intelligence boom after a recent selloff. Investors flocked to drugmaker Abb Vie Inc.'s $10 billion investment-grade bond sale after signs of investor fatigue for new debt to fund AI efforts. Barclays and HSBC say concern the Federal Reserve is dragging its feet on inflation is giving investors another reason to buy bonds that offer protection from accelerating price growth. A sale of 30-year Japanese bonds drew firm demand on Thursday, delivering some calm to a market buffeted by currency turmoil and worry over the government's debt load. China sold long-dated yuan-denominated sovereign bonds in Hong Kong at record-low yields, underscoring strong demand from global investors for the offshore issuance. European bonds are emerging as a safer choice for fund managers as they try to navigate an increasingly fraught global backdrop. Investors are pondering whether the Sell America trade is back after a flurry of economic-policy decisions out of Washington over the past two weeks. Global bond and currency investors are debating if it's time to dust off last year's 'Sell America' trade.
Oil: Hormuz Disruption and Supply Concerns
Oil rose in early Asian trade amid concerns over supply disruptions in the Middle East, extending gains on reports that Iran attacked "hostile targets" in the Strait of Hormuz. Oil extended gains on reports that Iran attacked "hostile targets" in the Strait of Hormuz, with Tehran seeking to bar US ships from the critical waterway in a deal with Oman. Crude futures fell to a three-week low after Treasury Secretary Scott Bessent said the US could be close to an agreement with Iran to reopen the Strait of Hormuz. The price of oil fell sharply on hopes that talks were progressing on reopening the Strait of Hormuz, with Qatar reporting progress in diplomatic efforts. A flare-up in geopolitical risks sent stocks and bonds lower as oil jumped, fueling inflation worries before Friday's jobs report. Iran says it has reached an agreement with Oman on the Hormuz shipping route, determined to retain a degree of control over the chokepoint. Commercial crude oil stockpiles were up by 2.5 million barrels in the week ended July 31, contrary to expectations of a 1.2 million barrel decline. The US shipped a record amount of distillate fuel overseas last week as domestic stockpiles fell again, the latest sign that the global scramble for diesel is draining US supplies. US imports of Saudi Arabian oil dropped to zero in July, the first time that's happened for an entire month since 1985, according to preliminary government data. OPEC's crude oil production recouped some more of its wartime losses last month with gains in Kuwait, Saudi Arabia and Iraq. Russia's oil exports slipped as a lull in drone strikes boosts refining, with Ukraine's switch to attacking tankers letting plants process more crude and ship less abroad. Fuel-makers enjoying skyrocketing profits will likely keep reaping standout margins through the next quarter and beyond, according to an executive from a top US refiner.
Metals: Gold and Copper Records
Gold edged higher in early Asian trade as markets monitored signs of diplomatic progress in the Middle East conflict, said Tickmill. Gold moved in a narrow range as traders assessed the impact of a reported Iranian attack in the Strait of Hormuz on the Federal Reserve's path for interest rates. Gold jumped the most since February as prospects for a deal to reopen the Strait of Hormuz reduced expectations for Federal Reserve rate hikes, while a break above a key technical resistance level fueled buying. Gold futures finished higher as the latest JOLTS report showed the number of job openings little changed in June. Chinese institutional investors have swooped on gold in recent weeks, helping to arrest the precious metal's decline and keep prices above the key threshold of $4,000 an ounce. Comex gold settled 0.09% lower at $4242.00, with gold and silver prices dropping and snapping two- and three-day winning streaks, respectively. Copper prices rose for the third consecutive trading session and ended at fresh records, with gold and silver also settling higher. Copper futures on New York's Comex climbed to a record high as investors awaited a decision on US tariffs while tracking a push to reopen the Strait of Hormuz. Copper advanced to its highest level since mid-May, topping $14,000 a ton in London, as traders monitored ballooning volumes held in the US ahead of an expected decision on an import tariff.
Economic Data: Payrolls, Growth, and Policy
The Philippine economy grew at the slowest pace since 2009 excluding the Covid period in the second quarter, defying expectations of a pickup as the protracted Middle East conflict stokes inflation and drags down consumer spending. India is not considering an early closure of a program aimed at attracting deposits from the country's 35-million-strong diaspora, with the central bank expecting robust inflows until the window shuts. India raised $40 billion from its diaspora to support the sagging rupee, with the central bank's rare push to repatriate savings drawing stronger than expected inflows. India expanded the size of its share sale in state-run insurance giant LIC to raise $3.3 billion after the base offer was oversubscribed, bolstering public finances amid challenges posed by high oil prices. The Indian government's plan to sell more shares in its insurance giant surprised the market by how much it raised and the pace of the deal. China is accelerating its push to internationalize the yuan as domestic banks add new foreign currencies available for direct settlement to bypass the dollar in cross-border trade. China's central bank is stockpiling more gold in Hong Kong, in a move that's likely to support the city's push to become a major bullion-trading hub. The US trade deficit narrowed in June as imports and exports both declined, retreating from a busy month in May, according to Commerce Department data.