US stock market holds near its all-time high and crude oil prices rise

The U.S. Stock market is drifting near its all-time high, while crude oil prices rise on uncertainty about when the Strait of Hormuz could reopen and get the global flow of crude going again, according to Castanet.

According to Castanet, the S&P 500 was barely changed in early trading, coming off its record set on Friday. The Dow Jones Industrial Average slipped 72 points, and the Nasdaq composite fell 0.1%. Several big tech stocks were falling in early trading, including Apple and Intel. Berkshire Hathaway rose after becoming one of the latest companies to deliver a stronger profit than analysts expected. Brent crude rose 1.6%.

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U.S. Markets pointed to a mixed open as oil prices climbed due to a seeming stalemate over the Strait of Hormuz. Futures for the S&P rose 0.2%, while futures for the Dow Jones Industrial Average fell 0.14%. Nasdaq futures were up 0.14% before the opening bell, as reported by Castanet.

Iran insisted that the U.S. Meet its demands in negotiations before the Strait of Hormuz reopens. Details emerged on the potential deal between Iran and Oman on managing the Strait of Hormuz as Tehran suggested that vessels linked to “hostile countries” would be barred. Brent crude, the international standard, gained 1.4% to $84.68 per barrel, and U.S. Benchmark crude advanced 1.4% to $79.30 per barrel.

"Negotiators said that a deal to establish a safe shipping route was close, but Iran may now be exploring just how much it can extract from the U.S. in return"

Bas van Geffen, senior macro strategist for Rabobank, via Castanet

European stock markets also closed mixed as investors weighed improving economic sentiment against uncertainty over U.S.-Iran diplomatic efforts and the reopening of the Strait of Hormuz, according to Aa. The pan-European Stoxx Europe 600 edged up 0.03% to close at 660.45 points, remaining near record-high levels.

Energy shares outperformed the broader market as oil and natural gas prices rose amid concerns that disruptions to shipments through the Strait of Hormuz could persist. European benchmark natural gas prices jumped about 8% as Iran and Oman remained short of reaching a final agreement on restoring normal shipping through the strategically important waterway, per Aa.

The strait accounts for around 20% of global liquefied natural gas (LNG) supply, equivalent to approximately 110 billion cubic meters annually, according to the European Central Bank cited by Aa. A prolonged disruption could intensify competition between European and Asian buyers for available LNG cargoes.

Market sentiment received some support from economic data showing investor confidence in the eurozone returning to positive territory. The Sentix Economic Sentiment Index rose 4 points to 0.9 in August, marking its fourth consecutive monthly increase. The expectations component edged up to 10.3, while the assessment of current economic conditions improved sharply but remained negative.

Market Sector Movements

• Energy sector stocks rose in tandem with the price of oil, with Marathon, Occidental and Valero emerging as the biggest gainers, according to Castanet.
• Cruise lines like Carnival and Norwegian, as well as hotels and travel booking sites, fell with the cost of fuel expected to rise.
• France’s CAC 40 rose 0.13% to 8,726.03, while Germany’s DAX 40 gained 0.02% to finish at 26,323.88.
• In contrast, the UK’s FTSE 100 declined 0.35% to 10,862.50, and Italy’s FTSE MIB fell 0.1% to 53,663.88, while Spain’s IBEX 35 was nearly flat, closing at around 20,173 points.

Tech stocks are also on the rise after a weak jobs report Friday raised the odds that the Federal Reserve would hold off on an interest rate hike at its next meeting. The fast-growth tech sector is reliant on cheap access to credit, and there had been expectations that the Fed was leaning toward raising borrowing costs to combat inflation. Shares were mostly higher in Europe and Asia, with Japan’s Nikkei 225 leading advances. The U.S. Dollar rose to 158.80 Japanese yen from 157.72 yen, while the euro fell to $1.1552 from $1.1561, and later traded at $1.1547 as of 1645GMT.

What to Watch Next

Inflation will be the focus this week in the U.S. With new data from July landing midweek. The Labor Department releases its consumer price index Wednesday, with economists expecting a slight easing from June. On Thursday, the U.S. Posts July data on producer prices, or costs that are in the pipeline before goods reach consumers. Investors are also awaiting eurozone labor market figures for further signals on the interest-rate outlook.