Morning Market Brief – 2026-08-04

Good morning. Tuesday morning greets us with a clear easing of geopolitical tensions, which immediately translates to the commodities market. However, investors' attention is shifting to the currency markets, where we are witnessing a historic, coordinated intervention by the US and Japan. Meanwhile, strong industrial data is coming in from the US economy, reminding us that its economic engine is still running at full throttle, giving central banks room to maintain higher interest rates.

Geopolitical Environment

After yesterday's jittery plunge and surges in commodity prices triggered by reports of a broken truce in the Middle East, the situation is reversing once again. According to news agency reports, the United States and Iran have halted direct strikes in recent days. Market narrative quickly shifted toward signals of de-escalation. As a result, crude oil (both Brent and WTI grades) sharply gave back yesterday's risk premium, pulling back noticeably from levels above $90 per barrel. At the same time, the OPEC+ cartel announced that seven member states will raise their production quotas by a combined total of around 188,000 barrels per day in September, which is further cooling market supply concerns. (Sources: Mint; Reuters; China Daily; Investing.com)

Signs of normalization are also visible on global trade routes. Logistics giant Maersk announced the return of its container service (connecting the Middle East to the US East Coast) to the route through the Suez Canal. This is an important signal of the slow restoration of shipping through the Red Sea. (Sources: Reuters; Al-Ahram)

Today's Highlights

• Unprecedented currency cooperation between the US and Japan. Yesterday we mentioned verbal support for the Japanese currency from the US Department of the Treasury, and today we have confirmation of concrete actions. Japan's Ministry of Finance and the US Department of the Treasury carried out a joint, coordinated intervention involving massive purchases of the yen. In response to this move, the USD/JPY exchange rate plummeted from multi-year highs (above 160), marking a strong appreciation of the Japanese currency. Such cooperation between two economic powerhouses is a clear signal to speculators that further weakening of the yen will not be tolerated. (Sources: Reuters; The Straits Times; 24×7 Live Newz)
• US manufacturing delivers a positive surprise. The manufacturing PMI (Purchasing Managers' Index — a barometer of sector activity) for the US, measured by the ISM institute, rose in July to 55.6 points from 53.3 points in June, easily beating market consensus (54.0 points). Particularly noteworthy, the new orders sub-index surged to around 56–57 points, and the employment component crossed the 50-point threshold for the first time in nearly three years. This means that the US manufacturing sector is not only growing, but is also starting to create new jobs again. (Sources: Reuters; FXStreet)
• Major central banks on a "hawkish" pause. Against the backdrop of strong US data, it is worth recalling the outcome of last week's central bank meetings. The US Fed (FOMC — Federal Open Market Committee) held rates steady at 3.50–3.75% by a vote of 9 to 3 (three policymakers favored a hike). Meanwhile, following a rate hike in June, the European Central Bank (ECB) maintained the status quo in July (the deposit rate stands at 2.25%). For European markets, today's preliminary HICP (Harmonised Index of Consumer Prices) inflation readings from the eurozone will be absolutely crucial, as they will shape expectations for the ECB's autumn moves. (Sources: Trepp; Federal Reserve; Morningstar; ECB; Reuters)

Market Background

• Wave of corporate earnings and share buybacks. Global corporations are boasting stellar results and sharing cash with shareholders. British banking giant HSBC reported H1 pre-tax profit of a whopping $19.5 billion and is launching another share buyback program worth up to $1 billion. Meanwhile, Japanese conglomerate Mitsui & Co. smashed analysts' forecasts, recording a quarterly net profit of 294 billion yen, which prompted the announcement of a massive buyback (up to 200 billion yen). (Sources: HSBC; Financial Times; Mitsui & Co.; Investing.com)
• Prysmian finalizes Atkore valuation. Following up on yesterday's news of a major industrial merger — official announcements confirm that Italy's Prysmian will acquire US-based Atkore in an all-cash deal ($95 per share). The total Enterprise Value in this transaction has been set at approximately $3.8 billion. (Sources: Prysmian; Investing.com)
• Market opening in Asia and Indian glitch. South Korea launched a 24-hour onshore market for USD/KRW trading to attract foreign capital. At the same time, Beijing and Hong Kong announced a package of measures to strengthen the yuan and bond markets (including an increase in the Bond Connect program limit). Meanwhile in India, the implementation of a new Closing Auction Session (CAS) algorithm caused a technical anomaly yesterday, artificially boosting the Nifty index relative to the BSE Sensex benchmark. (Sources: The Economic Times; ScanX Trade; The Hindu)

What to Watch

This week will be dominated by US labor market data, which takes on added significance following yesterday's strong industrial ISM.

• 04.08 (Today) – US: JOLTS Job Openings Report (16:00). A key indicator of labor market tightness. The more job openings, the greater the upward pressure on wages (making the fight against inflation harder).
• 04.08 (Today) – US: Trade Balance (14:30). Will affect Q2 GDP estimates and could trigger moves in the dollar's valuation.
• 05.08 (Wednesday) – Eurozone: Final Services PMI (10:00). Confirmation of the health of the European services sector.
• 05.08 (Wednesday) – US: ADP Report (14:15) and Services ISM (16:00). The services sector is the bedrock of the US economy, while ADP serves as the traditional "warm-up" before the official employment data.
• 06.08 (Thursday) – Eurozone: Retail Sales (11:00). An important reading reflecting purchasing power and European consumer sentiment.
• 07.08 (Friday) – US and Canada: Labor Market Reports (14:30). The famous US NFP report (Non-Farm Payrolls). This is the week's main macroeconomic event, which will ultimately set expectations for the Fed's autumn decisions.