Oil prices climbed in early Monday trading, with global benchmark Brent crude rising above $84 a barrel after a more than 5% increase over the past three sessions. US equity futures remained steady, while the S&P 500 closed 0.6% higher on Friday, reaching a new record. West Texas Intermediate crude also saw a 1.3% increase, trading at $79.22 a barrel. This market activity comes as investors are closely watching for any progress on a deal to reopen the Strait of Hormuz.
Despite the ongoing negotiations between Iran and Oman, a final deal to reopen the Strait of Hormuz remained elusive over the weekend. Iran renewed a substantial list of demands for Washington as conditions for a full reopening, suggesting that any immediate resolution is unlikely. This geopolitical tension continues to influence oil prices, though some analysts, like Wee Khoon Chong from BNY, see a "positive backdrop for Asia-Pacific with softer US dollar, lower crude oil prices and the broad recovery of equity sentiment."
Asian markets are expected to see gains, with contracts on Australia’s S&P/ASX 200 Index rising 0.4% and Japan’s benchmark index surging almost 1%. This expectation is partly due to a weaker US dollar and a fall in US bond yields. The euro remained largely unchanged at $1.1558, and the Japanese yen was steady at 157.83 per dollar. Cryptocurrencies also saw minor movements, with Bitcoin rising 0.1% to $65,198.95 and Ether increasing 0.2% to $1,924.16.
The broader economic context includes recent data indicating a weaker-than-expected labor market in the US, with employers unexpectedly cutting jobs in July and prior months' hiring figures revised downwards. This led traders to reduce the probability of a rate hike at the Federal Reserve's September meeting to roughly 43%, down from 64% a week prior. Spot gold, however, saw a slight dip, falling 0.2% to $4,334.67 an ounce.
