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Hormuz deadlock fuels oil rally

Crude prices advanced again on Tuesday as the chances of Washington and Tehran restoring shipping through the Strait of Hormuz appeared to recede. The renewed energy shock intensified inflation concerns and speculation that the Federal Reserve may need to tighten policy, putting Wednesday’s US consumer-price report firmly in focus. Wall Street ended Monday marginally lower, while Asian equities were mixed on Tuesday as gains in Korea and Australia contrasted with losses elsewhere in the region.

  • Date
  • Author Shane Strowmatt, Senior Investment Writer
  • Reading time 5 minutes

Iran map

Oil prices extended their rally on Tuesday as fading prospects for an agreement between the US and Iran to reopen the Strait of Hormuz heightened concerns over supply disruptions and inflation. Crude has risen about 10% over the past week, after gaining around 5% on Monday, following US President Donald Trump’s demand that Iran pay compensation in any peace deal. WTI was trading 0.4% higher at USD 82.46 per barrel on Tuesday, while Brent gained 0.3% to USD 87.99 per barrel. The impasse has increased expectations that elevated energy costs could prompt the Federal Reserve to raise interest rates, despite the US economy shedding more than 20,000 jobs last month. Investors now await US consumer-price data due on Wednesday for further guidance on the Fed’s policy outlook.

Asian equities mixed amid policy uncertainty

Asian shares traded mixed on Tuesday as concerns about elevated oil prices and the US interest-rate outlook offset resilient demand for AI infrastructure. Korea’s Kospi rose 0.9% to 6355.94 points, supported by semiconductor shares, while Hong Kong’s Hang Seng Index lost 0.7% and mainland China’s CSI 300 declined 0.1%. TSMC reported a 45% increase in July sales, while Nvidia announced plans with six financial institutions to mobilise more than USD 500 billion in third-party funding for AI infrastructure.

RBA holds rates, signals further tightening

The Reserve Bank of Australia (RBA) kept its cash rate at 4.35% on Tuesday after raising it three times earlier this year, while warning that further increases remain possible if inflation risks intensify. Annual headline inflation stood at 3.8% in June and is not expected to move towards the 2.5% target until late 2027, while the RBA forecast economic growth of about 1.4% this year. Falling house prices are expected to restrain household spending, although the central bank expects a recovery in property values and lower interest rates to support per-capita activity by 2028. Australia’s S&P/ASX 200 gained 0.4% to 9266.20 points on Tuesday.

US equities retreat from record levels

US equity indices edged lower on Monday as concerns over the conflict between the US and Iran outweighed easing interest-rate worries after Friday’s labour-market report. The Dow Jones Industrial Average slipped 0.1% to 53,975.98 points, while the S&P 500 declined 0.1% to 7753.11 points and the Nasdaq-100 lost 0.3% to 29,621.80 points. Nvidia fell 2.9%, Intel dropped 4.1% after announcing a USD 15 billion share sale, and Apple lost 1.6% following a downgrade, while SpaceX gained 4.2% to USD 138.74.

Euro-area investor confidence turns positive

The Sentix Economic Index for the euro area climbed 4 points to 0.9 points in August from -3.1 points in July, according to survey results released on Monday. The current conditions measure improved to -8 points from -14.8 points, while expectations edged up to 10.3 points from 9.3 points, supported by resilient economic data and recovering confidence. The Euro Stoxx 50 gained 0.2% to 6533.70 points on Monday, Germany’s DAX was little changed at 26,323.88 points, France’s CAC 40 rose 0.1% to 8726.03 points and the Swiss Market Index advanced 0.6% to 14,633.70 points.

Corporate and economic calendar

Corporate news in focus: There is no major corporate news scheduled today.

Economic data in focus: Italian trade balance (10:00) and US existing home sales (16:00).

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Editor: Alessandro Fezzi
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