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Tuesday, August 04, 2026
What’s happening: US stocks closed sharply higher on Monday amid easing tensions between the US and Iran.
What happened: Easing US-Iran tensions sent crude oil prices and Treasury yields lower, supporting overall market sentiment.
Equity markets in the US started August on an upbeat note, while investors awaited several key earnings and economic data this week.
Why it matters: Crude oil prices fell sharply on Monday after US President Donald Trump delayed strikes against Iran.
The US President urged Iran to sign a peace deal, aimed at reopening the Strait of Hormuz and curbing Tehran’s nuclear program.
Treasury yields moved lower amid easing inflationary concerns. Investors widely expect the Federal Reserve to hike its benchmark interest rates by at least 25 bps in September.
Communications services and tech stocks were among the biggest gainers on Monday. Shares of Meta Platforms jumped 6%, while Alphabet and Microsoft gained around 5%. Amazon’s stock rose more than 4.5%, reaching a record market valuation of $3 trillion.
Energy and consumer staples stocks bucked the overall market trend, settling lower on Monday.
The earnings season has been strong so far, with 85% of the 304 firms in the S&P 500 index that have reported earnings through Friday topped market expectations.
Shares of SpaceX jumped around 5.7% on Monday ahead of the company’s first quarterly earnings since going public, scheduled for Tuesday.
The Dow Jones index added 693.38 points, or 1.32%, to close at an all-time high of 53,178.41 on Monday. The S&P 500 surged 1.48% to settle at 7,600.50, hovering close to the record high hit in early June. The Nasdaq 100 climbed 1.78% to settle at 28,776.80.
What to watch: Investors will keep an eye on talks between the US and Iran.
Data on balance of trade (1630 UAE Time), JOLTs job openings (1800 UAE Time) and factory orders (1800 UAE Time) from the US will be released today. The US trade deficit, which widened to $77.6 billion in May from $54.6 billion in the previous month, is expected to narrow to $73 billion in June. Job openings in the US, which rose by 9,000 to 7.594 million in May, are expected to decline to 7.45 million in June. Analysts expect US factory orders to rise by 0.2% in June following a 1.3% decline in May.
Earnings results from Caterpillar, McDonald’s and Pfizer, due to be released today, will also remain in focus.
Context: The Japanese yen slipped versus the US dollar this morning after recording sharp gains in the previous session.
Details: Japan’s Finance Ministry confirmed conducting coordinated yen-buying operations with the US Treasury last week after the Japanese yen tumbled to a 40-year low last month due to rising concerns over higher energy costs and wide rate differentials.
Tokyo also indicated that it remains ready to act again, if needed and will not hesitate to conduct more coordinated interventions with the US.
US Treasury Secretary Scott Bessent confirmed the joint move, while calling the Fed for an expansion of its FIMA (Foreign and International Monetary Authorities) Repo Facility.
Meanwhile, data from the Bank of Japan showed that the country spent approximately ¥5.33 trillion on Friday, after making a record one-day purchase worth ¥8.45 trillion during the previous day.
Data released on Monday showed that the S&P Global manufacturing PMI for Japan was revised downward to 54.5 in July from a preliminary reading of 54.7. The figure came in below June’s reading of 54.8. However, it signalled the seventh consecutive month of growth in factory activity. Japan’s output surged the most since early 2014 with new orders recording the steepest growth in four-and-a-half years following upbeat AI-driven demand.
Strength in the US dollar weighed on the Japanese yen this morning. The US dollar index, which measures the greenback’s performance versus a basket of major peers, rose 0.1% to 99.97.
The USD/JPY forex pair gained around 0.3% to 157.60 this morning. Meanwhile, Japan’s Nikkei 225 fell 0.68% to trade at 63,321.91.
What to watch: Investors will keep an eye on moves made by Japan’s authorities to boost the yen.
Data on average cash earnings, S&P Global composite PMI and S&P Global services PMI from Japan will be released on Wednesday. Average cash earnings in Japan, which rose by 3.2% year-over-year in May, are expected to surge by 3.4% in June. Analysts expect Japan’s S&P Global composite PMI business activity index to rise to 53.1 in July versus a final reading of 52.8 in the previous month, while services PMI is expected to decline to 51.9 in July from a final reading of 52.2 in June. Bank of Japan’s monetary policy meeting minutes, due to be released on Wednesday, will also remain in focus.
Other Markets: European indices closed mostly higher on Monday, with the DAX 40, CAC 40 and STOXX Europe 600 Index up by 1.45%, 1.22% and 0.45%, respectively, and the FTSE 100 down by 0.10%.
Ukraine launched a drone attack on a busy beach in southern Russia, killing seven people. The news sent the USD/RUB pair lower in forex trading this morning.
Australia’s household spending climbed 0.8% in June, easing from the previous month’s 1.2% rise. The latest reading topping market estimates of a 0.2% gain lent support to the AUD/USD forex pair.
Ireland’s AIB manufacturing PMI rose to 55.1 in July from 54.9 in the previous month, sending the EUR/USD pair higher in forex trading this morning.
Colombia’s Davivienda manufacturing PMI fell to 52.7 in July from 53.7 in the previous month, which lent support to the USD/COP forex pair.
Singapore’s manufacturing PMI rose to 51.4 in July from 51.3 in the previous month. Although this was the strongest reading since November 2018, the USD/SGD pair rose in forex trading this morning.
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