US stocks reversed opening strength amid weak earnings and geopolitical fears - Newsquawk Asia-Pac Market Open

US stocks failed to sustain opening strength and gradually retreated throughout the session to close in the red with underperformance in the small-cap Russell 2000 index and sectors ultimately closed mixed with gains seen in Utilities, Energy and Financials, while Consumer Discretionary, Materials and Tech lagged. There was a lack of major catalysts to spur risk appetite and geopolitical fears remain at the forefront of market concerns with a NOTAM issued for Iranian airspace on Thursday morning between 01:00-04:00 UTC which was said to be due to military exercises.
USD was slightly firmer as it benefitted from yen weakness but with upside capped amid light newsflow and a quiet calendar.
Looking ahead, highlights include Japanese Current Account, Bank Lending & Eco Watchers Survey, Australian NAB Business Confidence, Philippines GDP, RBI Rate Decision, BoJ Summary of Opinions from the July Meeting, Comments from RBA Governor Bullock and Supply from Japan.

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LOOKING AHEAD

Highlights include Japanese Current Account, Bank Lending & Eco Watchers Survey, Australian NAB Business Confidence, Philippines GDP, RBI Rate Decision, BoJ Summary of Opinions from the July Meeting, Comments from RBA Governor Bullock and Supply from Japan.
Click for the Newsquawk Week Ahead.

US TRADE

US stocks failed to sustain opening strength and gradually retreated throughout the session to close in the red with underperformance in the small-cap Russell 2000 index and sectors ultimately closed mixed with gains seen in Utilities, Energy and Financials, while Consumer Discretionary, Materials and Tech lagged. There was a lack of major catalysts to spur risk appetite and geopolitical fears remain at the forefront of market concerns with a NOTAM issued for Iranian airspace on Thursday morning between 01:00-04:00 UTC which was said to be due to military exercises.
SPX -0.77% at 5,200, NDX -1.16% at 17,867, DJI -0.60% at 38,763, RUT -1.41% at 2,033.
Click here for a detailed summary.

DATA RECAP

US Consumer Credit (Jun) 8.93B vs. Exp. 10.0B (Prev. 11.35B)

FX

USD was slightly firmer as it benefitted from yen weakness but with gains capped amid light newsflow and a quiet calendar.
EUR traded marginally lower within a thin range and downside cushioned with a floor near the 1.0900 level.
GBP was ultimately flat after failing to sustain an incursion into 1.2700 territory with a pullback seen as sentiment soured.
JPY underperformed in the aftermath of the dovish comments from BoJ Deputy Governor Uchida although the currency is off its worst levels with USD/JPY back beneath the 147.00 handle.

FIXED INCOME

T-notes were lower in a continuation of the recent bear steepening amid a slew of corporate issuance and US Treasury supply this week,

COMMODITIES

Oil prices were firmer with prices supported by looming geopolitical risk, while inventory data also showed a larger-than-expected draw in headline crude stockpiles.
US EIA Weekly Crude Stocks w/e -3.7M vs. Exp. -0.4M (Prev. -3.4M).
Iraq set September Basrah medium crude OSP to Asia at par with Oman/Dubai (prev. -0.10/bbl) and to Europe at -USD 3.90/bbl vs dated Brent (prev. -2.40), while it set the OSP to North and South America at -USD 1.1/bbl vs ASCI. (prev. -0.65).
Libya's chief prosecutor reportedly ordered the arrest of their oil minister.
Libya's NOC declared a force majeure in its Sharara oil field beginning August 7th.
- US Republican candidate Trump said have to fill up Strategic Petroleum Reserves immediately, according to Fox News.

GEOPOLITICAL

MIDDLE EAST

Flight Radar said Egypt has issued a curious NOTAM instructing Egyptian airlines to avoid Iranian airspace between 0100-0400 UTC on August 8th which Flight Radar noted was curious as Egyptian carriers route around Iran already as a normal procedure. Egypt's civil aviation ministry confirmed it sent a notice to all Egyptian airlines to avoid flying over Iranian airspace on August 7th and 8th due to military exercises, while the UK also issued a NOTAM warning pilots against flying over Beirut, Lebanon.
Iran's acting foreign minister said Tehran has no option but to use its right to defend itself in the face of Israeli violations and Tehran's response will take place 'in the right time and in the appropriate shape'.
US officials are confident that Hezbollah's and Iran's response is imminent and initial assessments predicted an early-week attack, but the latest intelligence suggests any response may be delayed until Thursday or Friday, according to Al Arabiya.
US National Security Council spokesperson Kirby said they are as close as they have ever been to a Hamas-Israel ceasefire. However, it was later reported that hostage negotiations are stuck and that no date has been set for their resumption, according to Al Jazeera citing Israeli Broadcasting Authority sources.
White House said that they continue talks with partners and leaders in the Middle East, including Qatar and Egypt and urge a de-escalation, according to Al Jazeera.
US warplanes targeted sites of pro-Iranian militants west of the Euphrates River, according to Sky News Arabia.
Yemen's Houthis said they targeted two US destroyers in the direction north of the Red Sea.
Saudi’s Deputy Foreign Minister said the assassination of Hamas's Haniyeh is considered a 'blatant violation' of Iran's sovereignty.

OTHER

Russian President Putin said the Ukrainian incursion into the Kursk region is a major provocation and that he will meet with senior defence and law enforcement officials to discuss the Kursk attack. It was later reported that Russian military chief Gerasimov said the Ukrainian offensive in the Kursk region had been halted, while a state of emergency was declared in Russia's Kursk region amid the Ukrainian offensive.

ASIA-PAC

NOTABLE HEADLINES

Analysts cited by Global Times said there is ample cash in the system and no need for more liquidity after the PBoC opted not to inject any short-term cash into the financial market for the first time since 2020.
Japan’s top FX diplomat Mimura said no change in policy stance from his predecessor including regarding intervention and will continue to cooperate with the BoJ and other government agencies.

EU/UK