Global markets began the week on shaky footing as confrontations between Iran and the United States in the Gulf coincided with a claim by Tehran that it had closed the Strait of Hormuz. Washington pushed back, with President Donald Trump saying the strait remained open to commercial traffic, and U.S. officials reporting that 20 ships had been escorted through the waterway in the previous 24 hours.
Despite that, the United Kingdom Maritime Trade Operations office reported that transits had slowed to 10 by Friday. Commercial ship tracking sites showed no vessels in the narrowest part of the strait on Monday, or at least none with their transponders switched on. The threat to shipping was sufficient to push Brent and U.S. crude up by almost 4%, lift the dollar broadly and nudge 10-year yields about 2 basis points higher.
In Asia, the Nikkei led declines among regional equity markets, while European share futures were trading down around 0.6%. U.S. equity futures were also softer, with Nasdaq futures off roughly 0.6% as investors shifted focus toward the forthcoming earnings season and whether the lofty expectations for AI-related companies and chipmakers can be met.
The corporate calendar is heavy this week. Major banks begin reporting from Tuesday, and other notable names such as Netflix and General Electric are scheduled to publish results. Analysts at Bank of America highlighted a related concern: the AI-driven capex boom is pressuring corporate cash generation. Their note said hyperscalers have spent $234 billion this year and that forward free cash flow is expected to turn negative for the first time since at least 2007.
Market participants also slightly increased the probability of a Federal Reserve interest rate hike. That shift in expectations came just ahead of Fed Chair Kevin Warsh's first appearance before Congress in his new role.
On the data front, June inflation figures due on Tuesday could show some moderation in the headline rate from 4.2% as petrol prices ease. The article noted that some of that effect may reverse now that oil prices are on the rise again.
Currency moves were notable. The dollar strengthened to 162.05 yen, reclaiming some of the ground lost on Friday after Japanese Finance Minister Satsuki Katayama floated an idea to encourage the Government Pension Investment Fund and other retirement vehicles to repatriate portions of their cash holdings. The Government Pension Investment Fund was identified as a $1.8 trillion pool. The pound softened to $1.3381 ahead of a decisive week in UK politics, with Andy Burnham expected to be formally anointed as Labour leader on Friday and then named as prime minister on July 20.
Key scheduled appearances that could influence market sentiment on Monday include remarks from Fed Board Governor Christopher Waller, Fed Vice Chair for Supervision Michelle Bowman, European Central Bank member Isabel Schnabel and Bank of England Executive Director Ruth Smith. Investors will be watching those interventions alongside incoming corporate reports and macroeconomic data as they weigh risks to growth, inflation and policy trajectories.
Overall, market participants entered the week balancing heightened geopolitical risks affecting energy and shipping against an intense corporate reporting schedule and central bank commentary that could shape rate expectations.