Global Market Today: Asia stocks edge higher, oil up amid Gulf confusion

Asian share markets tracked U.S. markets higher on Monday, buoyed by a subdued U.S. jobs report that diminished the likelihood of an imminent increase in borrowing costs. However, the Gulf peace talks' lack of progress contributed to a slight rise in oil prices. Iran reported that a deal with Oman establishing new shipping lanes in the Strait of Hormuz was nearing completion, but reiterated that the waterway would reopen only after the United States addressed additional conditions.

Brent crude rose 0.9% to $84.32 a barrel, while U.S. crude increased 0.7% to $78.74 a barrel, as shipping through the strategic waterway remained minimal. The heightened fuel costs heighten expectations for the U.S. July consumer price report due on Wednesday, where analysts anticipate a 0.1% rise in the headline figure and 0.2% increase in the core metric.

Michael Feroli, JPMorgan's chief U.S. economist, suggests that a modest positive surprise could reignite speculation of a Federal Reserve rate hike next month. Meanwhile, Japan's Nikkei index mirrored the upward trend, surging 0.6%, and South Korea followed suit with a 0.5% gain. The MSCI's Asia-Pacific index (excluding Japan) also edged up 0.3%.

Despite the positive sentiment, European equity futures, including the EUROSTOXX 50 and DAX, slipped marginally, while FTSE futures experienced a modest decline of 0.4%. The S&P 500 futures saw a slight drop of 0.1%, while Nasdaq futures remained relatively stable after a 5% surge the previous week, driven by numerous positive earnings announcements.

Bank of America analysts noted that nearly 90% of S&P 500 reports were completed, and earnings per share (EPS) grew by 30% year-over-year, excluding investment gains at Alphabet and Amazon. A 76% EPS beat rate was the highest since 2021, with artificial intelligence (AI) companies leading the charge, posting a median EPS growth of 28% compared to 12% for non-AI stocks.

However, consensus expectations predict AI growth to decelerate to 16% in the next quarter. Meanwhile, bond markets witnessed a slight uptick in 10-year Treasury yields, currently sitting at 4.673%, as the market anticipates $125 billion in fresh issuance this week. The decline in yields, coupled with the overall risk improvement, caused the U.S. dollar to weaken broadly, with the euro nearing a seven-week high of $1.1557.

The dollar remained flat against the yen at 157.85, with investors hesitant about potential yen intervention if it depreciates excessively. In the commodity markets, gold held steady at $4,342 an ounce, having climbed more than 7% last week, as the drop in yields supported its price.