MARKET WRAPS
Watch For:
EU business & consumer surveys; U.K. money and credit; trading update from Pepco Group
Opening Call:
European stock futures traded higher early Tuesday. Asian stock benchmarks were lower; the dollar strengthened slightly; Treasury yields were flat, while oil futures rose and gold fell.
Equities:
Stock futures were tracking higher as the deadlock in U.S.-Iran ceasefire negotiations remain in focus.
Iran's ability to choke off oil flowing through the Strait of Hormuz-and use that as leverage in talks with the U.S.-is breaking down, raising the risk it will resort to military escalation to bolster its position.
The erosion of Iran's position comes as the U.S. Navy and Gulf oil producers have become better at fending off or evading Iranian attacks, allowing more tankers to cross the strait.
Middle Eastern crude exports rebounded this month to around their highest level since the war began in February, oil data trackers say.
So far, the market has done a great job sailing into the headwinds and brushing them off," said Bret Kenwell, U.S. investment analyst at eToro.
Forex:
The U.S. dollar was slightly stronger. The persistent tensions have "kept oil prices elevated and reinforced concerns about inflation," OCBC Group Research said.
"Recent market moves suggest that higher yields are acting more as a brake on risk appetite than a trigger for broader market stress," it said. "Rising oil prices, elevated Treasury yields and resilient U.S. economic data continue to support the USD."
Bonds:
U.S. Treasury yields were unchanged. "As bond yields move higher, fixed income becomes increasingly competitive with equities for investor capital," said Seema Shah, chief global strategist at Principal Asset Management.
"Even if earnings remain strong, higher discount rates are likely to place greater pressure on valuations and contribute to more volatile market conditions."
Energy:
Oil gained amid the ongoing deadlock in U.S.-Iran ceasefire talks. "Iran and the U.S. remain far apart over a ceasefire agreement and the reopening of the Strait of Hormuz," NAB's Sally Auld said in commentary.
"Tehran said it was standing by a proposal rejected by President Trump, although Iranian Foreign Minister Abbas Araghchi was reportedly still due to meet mediators in New York," the group chief economist added.
Metals:
Gold edged lower. A firm U.S. dollar and a renewed rise in bond yields pressured the yellow metal overnight, with higher oil prices and Middle East tensions renewing inflation concerns, said Christopher Tahir, senior market strategist at Exness.
Markets are expecting further tightening from major central banks, and geopolitical developments will remain crucial for gold, Tahir added.
Copper prices gained as investors weighed expectations for tighter monetary policy against a still-supportive physical market, Baocheng Futures analysts said. Tight mine supply and widening import losses continue to provide a floor for prices, while low domestic inventories offer some support to spot copper, they said.
Prices might remain rangebound at elevated levels in the near term, with traders likely to stay cautious ahead of China's weeklong National Day holiday.
Iron ore prices were lower. Chinese steel output fell further while steel mills' profits continued to weaken. Investors are watching inventories, said Xinhu Futures analysts.
The combination of weaker steel production and narrowing mill margins is keeping demand expectations subdued, while relatively firm shipments are adding to near-term supply pressure, they added.
TODAY'S TOP HEADLINES
Middle East Oil Exports Rebound as Iran's Chokehold on Hormuz Breaks Down
DUBAI-Iran's ability to choke off oil flowing through the Strait of Hormuz-and use that as leverage in talks with the U.S.-is breaking down, raising the risk it will resort to military escalation to bolster its position.
The erosion of Iran's position comes as the U.S. Navy and Gulf oil producers have become better at fending off or evading Iranian attacks, allowing more tankers to cross the strait.
Why the Midterm Elections Matter for the Stock Market This Year
U.S. midterm elections are right around the corner, and they may pose a threat to the driving force behind the bull market-the AI trade.
In the lead up to the midterms, which are slated for Nov. 3, the stock market has proven quite resilient. The S&P 500 has bucked the September Effect, staying positive month-to-date. This strength comes in the face of historic Treasury yields, high oil prices, and a interest-rate hike from the Federal Reserve during a relatively quiet period in between earnings seasons. And its largely driven by strength in the tech sector. The Technology Select Sector SPDR ETF has gained 4.3% this month, while the S&P 500 was roughly flat.
AstraZeneca to Invest $2 Billion in Summit Therapeutics, Collaborate on Cancer Drugs
AstraZeneca is investing $2 billion into Summit Therapeutics as part of an expanded partnership between the two companies.
Summit said Monday that AstraZeneca will buy $2 billion of convertible preferred shares, representing a common stock price of $18.36 a share, a 10% premium to the stocks' five-day volume-weighted average price.
Saudi Arabia Resumes Red Sea Oil Exports in Blow to Iran
DUBAI-Saudi Arabia has resumed exporting oil via its East-West pipeline after repairing damage caused by drone strikes, people familiar with the matter said Monday, restoring a crucial route around the Strait of Hormuz and dealing a blow to Iran.
Stretching 750 miles across Saudi Arabia to the Red Sea port of Yanbu from the kingdom's oil-producing heartland on the Persian Gulf, the East-West pipeline has become one of the world's most important pieces of energy infrastructure during the Iran war, serving as a workaround for sharply curtailed tanker traffic through Hormuz.
OpenAI Scraps Release of New AI Model Over Safety Concerns
OpenAI says it is scrapping the release of its next-generation AI model over safety concerns that researchers raised during internal testing, in one of the clearest signs so far that agent misbehavior could stymie the industry's rapid progression.
The move follows a summer punctuated by reports of artificial-intelligence systems industrywide going rogue, and marks a rare case of a major AI developer ditching a new release because of safety concerns.
Goldman's Board Has Discussed a Plan to Name John Waldron as Its Next CEO
The board of Goldman Sachs has discussed a plan for David Solomon to step down as chief executive and be replaced with Chief Operating Officer John Waldron as soon as next year, according to people familiar with the matter.
Discussions have involved Waldron, who is also the bank's president, taking over the top job around the end of 2027 or in 2028, the people said. Under the plan, Solomon is likely to be executive chairman of the Goldman board for around one to two years after he steps down from the CEO role, some of the people said.
Write to singaporeeditors@dowjones.com
Expected Major Events for Tuesday 04:30/NED: Sep Producer confidence survey
06:00/SWE: Sep Monthly Business Tendency Survey
06:00/SWE: Sep Consumer Tendency Survey
06:45/FRA: Aug Housing starts
07:00/SPN: Aug Retail Sales
07:00/SVK: Sep Business tendency survey
07:00/SVK: Sep Economic sentiment indicator
07:00/SPN: Sep Flash Estimate CPI
07:00/CZE: 2Q LFSS Employment & Unemployment
07:00/SWI: Sep KOF economic barometer
08:00/ICE: Sep CPI
08:00/ITA: Jul Industrial turnover
08:30/UK: Aug Money and Credit - Lending to Individuals, Lending to Businesses, Broad Money and Credit
08:30/UK: Aug Monetary & Financial Statistics
08:30/UK: Aug Bank of England effective interest rates
09:00/CYP: Jul Industrial Production Index
09:00/EU: Sep Business & Consumer Surveys - Business Climate Indicator & Economic Sentiment Indicator
09:00/MLT: Aug Registered Unemployed
09:00/ITA: Aug PPI
09:30/BEL: Sep CPI
17:59/UK: REC JobsOutlook survey
23:01/UK: Aug UK monthly automotive manufacturing figures
23:01/UK: Aug Zoopla House Price Index
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