Morning Wrap: The weekend slump in oil prices is accelerating 💥 (27.07.2026)

The US and Iran have announced a mutual pause in military attacks following two weeks of the US bombing campaign – Washington suspended its air strikes after advisers warned that targets and weapons stocks were running low, whilst Tehran declared that it would hold off on retaliation “for as long as the US maintains the pause”. This is the second such thaw since June (the first memorandum fell apart after a month), the Strait of Hormuz remains de facto closed (1–3 ships a day compared with the usual several dozen), and the parties remain far from reaching an agreement on uranium enrichment. An additional source of tension is Ukraine’s attack on an Iranian merchant ship in the Caspian Sea, which Tehran has described as a “hostile act” against Kyiv.

On the economic front, Friday’s entry into force of Trump’s new wave of tariffs (10–12.5 per cent on 60 trading partners, including the EU, China, the UK and Canada) under Section 301 of the Trade Act of 1974 has circumvented the previous legal restrictions following the Supreme Court’s February ruling – the market reacted calmly as the move was expected, but strategists warn that this is now a structural, rather than a temporary, risk factor for global growth. This week’s key event is the Fed meeting (28–29 July) chaired by Kevin Warsh – the market is currently pricing in a roughly 30–38 per cent chance of an interest rate hike right now, despite earlier expectations of cuts in 2027, which is a result of the rebound in oil prices and hawkish comments from some FOMC members.

Optimism surrounding the lull in the conflict triggered sharp movements in the markets – WTI crude fell by as much as over 5% to around $84.5 per barrel, whilst Brent dropped by ~4.9–5.8% to around $87.5. S&P 500 futures rose by around 0.7–0.9 per cent, the Nasdaq 100 by as much as 1.2%, and Dow Jones futures by around 0.6%, rebounding from two weeks of losses (the S&P and Nasdaq closed the previous week down 0.6% and 2.1% respectively).

US bond yields fell – 10-year yields by around 4–5 basis points to 4.63 per cent, whilst 30-year yields fell by 4 basis points to 5.12 per cent, which, combined with lower energy prices, is easing inflationary pressure, although BMO Capital Markets emphasises that yields remain close to the upper end of the range amid concerns about a hawkish Fed.

Asian markets reacted mixed – Japan’s Nikkei 225 fell by 0.12%, but the Topix rose by 0.87%; South Korea’s Kospi rose by 0.44%, whilst the Kosdaq rose by as much as 1.71%. The Australian ASX 200 jumped by 1.17 per cent, the Hang Seng gained 0.81 per cent, and the Chinese CSI 300 rose by 0.25 per cent.

Chinese industrial profits for June rose by 15.1 per cent year-on-year, marking the second consecutive month of deceleration following a 21.1 per cent increase in May – for the first half of the year as a whole, profits rose by 18.7 per cent, compared with 18.8 per cent for the January–May period, which still points to a robust boom driven by AI and chip manufacturing.

The US dollar weakened on the back of rising risk appetite – the USD index fell by 0.28%, the euro gained ground (the EUR led the G10 currencies), whilst the pound and other risk-sensitive currencies also appreciated against the dollar. USD/JPY and USD/CNH remained virtually unchanged, signalling that the dollar’s movement was mainly driven by risk appetite rather than a shift in interest rate expectations.

Gold rose significantly (+1% to around 4,090–4,110 USD per ounce), buoyed by reports of a resurgence in Chinese purchases (gold imports in China reached 173 tonnes in June, the highest level in two years) and hopes for de-escalation – although uncertainty surrounding the Fed’s decision this week is limiting further gains. Silver rose even more sharply (+2.31%), whilst natural gas fell by 2.83% in the wake of the oil price sell-off.

Among the companies, the biggest sensation is the debut of Chinese memory manufacturer CXMT on the Shanghai STAR Market – its shares soared by over 500 per cent (to around 470–531 per cent depending on the source), making it the most valuable listed company in mainland China with a market capitalisation of around 3.5 trillion yuan, after raising US$8.6 billion in its IPO. Meanwhile, Nvidia is negotiating a massive memory supply deal with SK Hynix (worth up to US$500 billion), which could allay fears of shortages in the AI market, and the company is also in talks to provide around US$250 billion in financial support to OpenAI as part of a data centre project.

Cryptocurrencies also benefited from the general ‘risk-on’ sentiment – Bitcoin rose by 0.79% to around USD 65,200–65,400, although the increase is clearly more modest than that seen in precious metals or stock market indices.

Today’s trading session in Europe will focus on the German Ifo index (forecast 86.1, compared with 85.6 previously) and this afternoon’s US data on durable goods orders and the Dallas Fed index – the key question remains the sustainability of the lull in the Iran-US conflict, as the market is pricing in an optimistic scenario, even though the situation in the Strait of Hormuz and the Red Sea has not actually changed, whilst in the background investors await Wednesday’s Fed decision and a series of results from four companies in the Mag7 group.