Global Stocks Rise on Hormuz Hopes As Markets Await Nvidia Results – Economy news

Iran and Oman said they had discussed “a joint temporary navigational corridor” through the Strait of Hormuz, raising hopes for a breakthrough in the nearly six-month US-imposed war that has disrupted oil markets and fueled global inflation concerns.

Brent crude futures fell for a third straight day, dropping nearly 3% to $85.95 a barrel on expectations that more oil could move through the Strait, which handled a fifth of the world’s traded oil before the war.

The decline in oil prices also pushed short-term bond yields lower as investors reassessed expectations for central bank interest rates.

The yield on two-year German bonds fell for a second day to a more than one-week low of 2.771%, while the yield on two-year US Treasuries was steady at 4.195% after falling about 4 basis points on Tuesday.

Oil prices have “moved away from that 90+ move, so there is some optimism that they could cool further. But we really need to see the traffic move through the Strait of Hormuz to get more comfortable with the idea that inflationary pressures are cooling considerably,” said Fiona Cincotta, a senior markets analyst at City Index.

MSCI’s world stocks index was up 0.1%, while Europe’s benchmark STOXX 600 was pinned at its highest level in more than one week.

US inflation data up next

Markets are now awaiting the US Personal Consumption Expenditures Price Index, due at 1230 GMT, which could help investors gauge the Federal Reserve’s monetary policy trajectory for the rest of the year.

Wall Street futures were little changed ahead of the report.

Odds of at least a 25-basis-point interest rate hike in September have fallen to 36% from around 67% earlier this month after recent data suggested price pressures were moderating, the CME Group’s FedWatch Tool showed.

However, rates are still expected to rise by year-end.

“There is ⁠potential for one rate hike before the end of the year still, but I don’t think it will take place in September given the volatility that we’ve still seen in oil prices and the division in the Federal Reserve,” Cincotta said.

Investors await Nvidia results

Nvidia is scheduled to report second-quarter earnings after US markets close, with investors focused on whether the massive AI spending boom is sustainable and can generate profits that satisfy markets.

The stock has gained 14% this year, putting it on track for its smallest annual gain in four years as the AI trade broadens across geographies and sectors.

Nvidia shares were up 0.3% in US pre-market trading, along with rivals Advanced Micro Devices and Broadcom.

Options data pointed to a smaller expected move in Nvidia shares after earnings compared with previous results, suggesting the company’s performance is becoming somewhat more predictable.

Meanwhile, fixed-income and currency markets have faced greater scrutiny since the US Treasury department unveiled measures last week to expand its debt buyback program in an effort to ease pressure on longer-dated bond yields.

The move instead shifted pressure toward the dollar from the bond market, reviving the debasement trade, in which investors buy assets such as gold and bitcoin on expectations that government spending and debt will erode the value of currencies.

The dollar index, which measures the US currency against six other currencies, stood at 99 and was on track for a 1% decline in August.

Long-term US Treasury yields were slightly firmer ahead of the Federal Reserve’s Jackson Hole symposium later this week.

Spot gold last fetched $4,618.95 an ounce, just below the three-month high reached in the previous session.