Market Notes

Market mood

The composite sentiment reads Neutral at 14.3. S&P 500 futures, a read on where the index may open, are up about 0.6%, pointing to a firmer start. The VIX is 14.9. That is calm. The Fear and Greed Index is 50 for stocks and 69 for crypto.

Gold is up about 1.2%. Oil is up about 0.9%. The DXY is slightly firmer. The US 10-year yield is ticking higher. Bitcoin is up about 1.5%.

After Monday’s selloff on Middle East headlines, the tone is steadier into data. Expect headline-sensitive, two-way trading with rates guiding equities.

What happened in the last 24 hours

1) US and Iran resumed strikes, and a tanker was hit in the Strait of Hormuz, a key oil shipping lane. Oil pushed above 90 on supply risk and transit uncertainty. The White House signaled readiness to respond, and the former President vowed harder hits. Equity index futures slipped on the escalation before stabilizing overnight.

Trading relevance: Higher oil feeds inflation fears, lifts yields, and pressures broad equities while supporting energy and defense plays.

2) Brent and WTI logged their strongest daily gains since late July. The move reflected both physical risk to flows and a higher implied chance of further disruptions. Options activity shifted toward higher strike protection in crude.

Trading relevance: Persistent oil strength hardens inflation expectations and keeps upward pressure on yields; that tightens financial conditions and weighs on rate‑sensitive stocks.

3) US stocks fell Monday but still closed August higher. The Dow shed about 370 points on the day as oil jumped and rate worries resurfaced. Volatility stayed contained into the close, which limited forced de-risking.

Trading relevance: The market is selling strength in growth sectors when yields rise; support appears on pullbacks but is fragile if rates extend higher.

4) A high-profile policy speech pushed rate-hike odds up. Traders lifted the probability of a September hike as officials emphasized inflation vigilance. The dollar firmed and the US 10-year yield rose.

Trading relevance: A more hawkish path pressures high-multiple tech, supports financials, and favors the dollar over EUR and JPY.

5) Washington told Moscow no economic relief is coming without an end to the Ukraine war, as Europe shunned Russia at the G20. Russia flagged plans for large strikes on Ukraine’s power assets. Energy security remains a live risk for Europe into autumn.

Trading relevance: Ongoing war risk supports oil and refined products, keeps a floor under European power and gas, and adds a mild support to gold as a geopolitical hedge.

Today’s calendar

• 09:00 UTC. EUR CPI Flash Estimate y/y. Forecast 3.3%, previous 2.9%. A downside surprise eases ECB pressure, likely lifting the DAX and weighing on EUR; an upside surprise pushes Bund yields up and pressures European equities.
• 09:00 UTC. EUR Core CPI Flash Estimate y/y. Forecast 2.5%, previous 2.5%. An upside surprise would reinforce sticky inflation, boosting EUR and European yields; a miss would support risk appetite in Europe and soften EUR.
• 14:00 UTC. USD ISM Manufacturing PMI. Forecast 55.2, previous 55.6. A strong beat would push yields and the dollar up and weigh on tech and duration‑sensitive assets; a miss helps longer-maturity bonds, gold, and rate‑sensitive equities.
• 14:00 UTC. USD ISM Manufacturing Prices. Forecast 70.5, previous 71.1. Higher prices paid would reignite inflation concern, lifting yields and hurting equities; softer prices ease pressure on yields and support stocks.
• 14:00 UTC. USD JOLTS Job Openings. Forecast 7.33M, previous 7.36M. A higher print implies a tighter labor market and stickier wages, lifting yields; a lower print would ease wage pressure and support bonds.

Key concept today

Good news is bad news.

When growth data beat, yields and the dollar often jump as traders expect firmer policy. Equity valuations compress when the discount rate rises, which can offset better earnings prospects.

This dynamic is strongest when inflation is a live concern. Oil’s rise sharpens that sensitivity. A hot ISM plus higher prices paid can hit stocks even if it signals stronger demand.

The reverse also holds. Softer data can pull yields down and lift equity valuations, even if it points to slower growth. The first move often runs through rates before equities adjust.

Sequence matters. Watch ISM at 14:00 UTC, then the reaction in the US 10-year and the dollar. Equities usually follow those signals.