Today Markets Morning Brief – Wrap It’s getting hot in the Persian Gulf again, oil is back in the spotlight.

Stock Market

• Tuesday’s session on Wall Street ended with declines in major indices.
• The Dow Jones Index pulled back by over 0.2% and fell below the 53,000 pt level.
• The S&P 500 lost nearly 0.5%, reflecting a deterioration in market sentiment.
• The tech-heavy Nasdaq was hit the hardest, dropping by over 1.1%, with the chipmakers sector coming under the most pressure.
• The largest declines were recorded by US memory manufacturers – Micron and SanDisk, whose shares lost approximately 5% and 7% respectively.
• Among other key tech entities, Intel plummeted by nearly 10%, and AMD dropped by almost 7%.
• Companies from the hyperscalers group – Microsoft, Meta, Amazon, and Alphabet – performed relatively well, ending the day in the green.
• Negative sentiment prevails in Asian markets, and most stock exchanges in this part of the world continue their sell-off.
• The South Korean KOSPI is performing the worst, losing over 5%, reacting to global risk factors and deteriorating sentiment related to the AI sector.
• The Japanese Nikkei is losing about 1%, following the downward trend in the region.
• Stock exchanges in the Middle Kingdom are doing much better, with Hong Kong’s Hang Seng gaining over 2.5%.

Geopolitics and Energy Sector

• Investor sentiment was worsened by rising geopolitical tensions in the Middle East, triggered by an Iranian attack on a Qatari LNG tanker near the Strait of Hormuz.
• An additional risk factor was the US-led strikes on military targets in Iran in response to earlier attacks on commercial vessels.
• After the session ended, the rally in commodity prices accelerated following the US decision to revoke the license (permission) for the sale of Iranian oil and further military actions against Iran, which increased the risk of further sanctions and supply restrictions.
• Tehran considered the reinstatement of oil sanctions a violation of previous peace agreements, and the Iranian command announced a “crushing retaliation”, accusing Washington of breaking the applicable ceasefire agreements.
• Unconfirmed reports suggest the possibility of the Iranian navy closing the Strait of Hormuz, which would mean a serious escalation of the conflict.
• Disruptions to traffic through one of the key transport routes for oil and LNG increased concerns over the security of global energy supplies and stoked risk aversion in the markets.
• China has purchased at least 26 million barrels of oil from Persian Gulf countries in recent days for delivery in July and August.
• Beijing took advantage of steep price discounts offered by Saudi Arabia—the largest since 2020—which is intended to help rebuild Chinese stockpiles after a period of limited imports.

Commodities

• Brent oil contracts rose by approx. 3% to $74 per barrel in reaction to the escalation of the conflict in the Middle East.
• American WTI oil ended the day nearly 3% higher at $70 per barrel.
• Mixed sentiment prevails in the precious metals market, reflecting investor uncertainty.
• Gold is losing about 0.4% and testing the $4,100 per ounce level, undergoing a slight correction.
• Silver is hovering around its baseline and trading in the region of $61 per ounce.

Macroeconomics and Currencies

• The Reserve Bank of New Zealand (RBNZ), in line with broad market expectations, raised its Official Cash Rate (OCR) by 25 bps to 2.50%.
• The RBNZ simultaneously signaled that persistent inflationary risks may require further tightening of monetary policy.
• The hawkish tone of the statement supported the New Zealand dollar (NZD), as investors increased expectations for further rate hikes in the coming months.
• RBNZ Governor Anna Breman assessed that inflation in New Zealand may have already peaked.
• The central bank remains cautious due to ongoing uncertainty regarding price pressures.
• It was emphasized that future interest rate decisions will depend on incoming data, even though the baseline scenario remains a gradual monetary tightening.

Cryptocurrencies

• A sharp deterioration in sentiment is visible in the digital assets segment, where investors reduced their risk exposure.
• Bitcoin is losing about 0.8% and dropping below the $63,000 level.
• Ethereum is losing over 1% and testing the support level at $1,750.

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