US Market Open: Futures a touch lower, NQ underperforms ahead of Tesla and Alphabet earnings

US Secretary of State Rubio said the US has many options to deal with Iran if it refuses to negotiate. He also stated that China is displeased with Iran's actions in the Strait and Iran is in a lot of trouble.
Iranian Interior Ministry spokesperson said there is currently no ongoing negotiation and that it may only involve the exchange of messages, Mehr News reported.
BoJ officials are reportedly considering hiking rates faster than every 6 months due to the JPY's weakness adding to upside inflation risks, Bloomberg reported. Initial weakness was seen in JGBs while JPY saw fleeting strength.
US equity futures trades with losses, with underperformance in the NQ ahead of Tesla and Alphabet earnings AMC.
Fixed income benchmarks hold steady despite the surge in energy prices (Brent +4.8%).
Looking ahead, highlights include US MBA Mortgage Applications, Supply from the US, Earnings from Tesla, Alphabet, and IBM.

EUROPEAN TRADE

EQUITIES

European equity futures are mostly in the green, following on from a positive APAC session; upside which comes despite the ongoing US-Iran conflict and elevated energy prices. For the UK, a cooler/in-line inflation report lessens the need for a BoE hike, though the ongoing geopolitical environment will keep policymakers wary on the path ahead. As it stands, money markets assign a 12% chance of a hike next week, and fully priced in by November.
European sectors hold a positive bias; Energy and Insurance tops the pile, whilst Tech lags, joined by Travel & Leisure. European pharma names have been in focus, after US President Trump stated that generic drugs will not be subject to US tariffs until 2028 but will then face 100% levies. Given European pharma names typically produce exclusive/high-patented drugs, for reference, the Indian pharma sector fell as much as 2% in APAC trade. However, the likes of Sandoz (-4%) and Bayer (-2%) have extended lower this morning.
US equity futures are trading with losses, with underperformance in the tech-heavy NQ. Pressure which appears to be a bit of a pull-back from recent strength, and as the KOSPI more-or-less erased most of its overnight gains towards the end of the APAC session. Sticking on tech, SK Hynix denied a report which suggested that the Co. was in talks to buy Intel’s (-3%) Ohio plant. Ahead, focus will be on earnings from Tesla, IBM, and Alphabet.
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FX

G10s are mixed against the USD, with slight outperformance in the EUR and JPY while antipodeans lag.
Geopolitics remains constructive for the Greenback on paper with oil prices firmer once again, but the environment fails to translate into Buck strength. USD specific catalysts are light with an extremely light data calendar, so focus will be on GOOGL earnings due after the NY closing bell, potentially a report which could give the Buck a bias.
JPY moved sharply lower, USD/JPY falling 45 pips from recent highs, before paring some of the move. A Bloomberg source report said the BoJ is said to be open to a hike faster than every 6 months, adding the recent JPY weakness is seen as an upside risk to inflation. Despite the move lower in USD/JPY, markets seem inclined to buy dips in the pair, looking to push it towards the 165.00 region, where option structures last week were believed would be the next pain point for the MoF. USD/JPY is a little weaker and just below 163.00.
GBP/USD has been choppy throughout the session and ultimately lacks direction within a 1.3370-1.3390 range, despite a broadly positive inflation report. Headline Y/Y cooled at a faster rate than expected, and 0.5ppts below BoE’s April MPR forecast; Services cooled in line with BoE forecast due to volatile airfares, while core metric stood at 2.6%, in line with BoE forecast. Within the series, one element likely to be welcomed by policymakers is the food component, slowing to its lowest since August 2024, at 1.1ppts below the BoE forecast. Overall, a report which supports the narrative of a BoE unchanged for the remainder of the year.

FIXED INCOME

Global fixed income benchmarks initially came under pressure given the rise in energy prices (Brent +3.2%); however, fixed income has reversed off its earlier lows, despite a clear driver.
Gilts (-8 ticks) trade at the top end of a 86.33-86.69 range, reversing the earlier losses. The broadly positive inflation figure initially failed to support UK gilts. To recap, headline inflation ticked lower to 2.6% Y/Y (exp. 2.7%, prev. 2.8%), while core inflation held at 2.6% Y/Y (exp. 2.5%). Services inflation also fell to 3.6% Y/Y from 3.8%, while food prices fell for a second consecutive month. ING sees the BoE holding rates throughout 2026, with the trend of lower core service inflation and low private-sector wage growth.
JGBs (-18 ticks) traded rangebound throughout the Asia-Pac session but have come under recent pressure following a Bloomberg scoop. The report stated that the BoJ is open to a hike faster than every 6 months, while adding that the recent JPY weakness is seen as an upside risk to inflation. The Bank is close to a stage of anchoring, not spurring inflation, the report added. Following this, markets are fully pricing a rate hike in December. Elsewhere, the 40-year JGB auction drew its strongest demand since March 2025 (b/c 2.82x vs prev. 2.70x).
USTs (-1+ ticks) hold steady, just shy of last week's trough of 108-17, seemingly unaffected by the higher energy prices.
Germany sells EUR 1.708bln vs exp. EUR 2bln 2.60% 2041 and 3.40% 2047 Bund.
Australia sells AUD 900mln 2.75% 2035 AGBs: b/c 4.37x (prev. 3.65x), average yield 4.9457% (prev. 4.4140%).

COMMODITIES

Crude futures are firmer following several escalatory updates overnight and in the European morning. To recap, US CENTCOM confirmed the US military completed its 11th night of airstrikes against Iran. Iran retaliated by launching drone attacks targeting a US military base at Camp Doha in Kuwait, as well as locations in Bahrain and Jordan. On the diplomatic front, an Iranian Interior Ministry spokesperson said there is currently no ongoing negotiation, and it may only involve the exchange of messages. Further, Iranian lawmaker Qashqavi said US President Trump's claim about Iran's request for negotiations is not true. On Hormuz, the Iranian Army Commander-in-Chief says Iran controls the Hormuz Strait and will fire upon American forces. Further, the Houthis' maritime blockade against Saudi Arabia saw several tankers moving to avoid the Bab el-Mandeb Strait. If Bab el-Mandeb, voyages to Asia may only occur via the Suez Canal, which adds notable time and expenses. On that note, CMA CGM (the third-largest container shipping company globally) will impose an emergency fuel surcharge effective August 1 following the renewed escalation of hostilities in the Strait of Hormuz.
WTI and Brent are higher by over 4% intraday at the time of writing, with Brent towards the top end of a USD 91.31-95.24/bbl range, while WTI resides towards the upper end of its 84.44-88.25/bbl band. The Middle East situation and soaring insurance costs have also prompted Dutch TTF to surge, with the front-month closer to EUR 62/MWh vs yesterday’s sub-EUR 60/MWh prints.
Precious metals are firmer intraday but off worst levels, feeling opposing forces from higher oil prices and some technical factors after the yellow metal topped USD 4,100/oz. Spot gold trades between 4,076-4,141/oz at the time of writing. Spot silver is more contained between USD 58.73-60.06/oz. Base metals are mostly firmer to varying degrees, but copper gives back some recent gains amid the rise in oil prices and its subsequent effect on inflation and growth.
3M LME copper trades around the middle of a USD 13,769.00- 13,919.00/t parameter.
US Private Inventory Data (bbls): Crude +2.6mln (exp. -0.5mln), Distillates +1.8mln (exp. +1.0mln), Gasoline -1.4mln (exp. -1.8mln), Cushing -0.7mln.
US President Trump formally approved a landmark nuclear deal with Saudi Arabia that will provide the country with a civilian nuclear program and potentially open the door to uranium enrichment in the kingdom's territory, according to US officials cited by WSJ.
Goldman Sachs analysts raised TTF forecasts for Q3 and Q4 to EUR 60/MWh (prev. saw 41/MWh) and EUR 53/MWh (prev. 40/MWh), following an assumed delay to Persian Gulf LNG export normalisation to October 2026.

TRADE/TARIFFS

US President Trump posted "Effective August 1st, 2026, all Generic Drugs being brought into the United States will continue to have a TARIFF of ZERO PERCENT for a two year period of time, after which the TARIFF will be raised to 100% for a one year period."
US Secretary of State Rubio said he discussed trade issues with China, including the Board of Trade. Additionally, Rubio said China's He and Wang talked about Xi's trip to the US and that both sides have differences but their job is to manage those.

NOTABLE EUROPEAN DATA RECAP

UK Inflation Rate YoY (Jun) Y/Y 2.6% vs. Exp. 2.7% (Prev. 2.8%); Services 3.6% (prev. 3.7%).
UK Inflation Rate MoM (Jun) M/M 0.1% vs. Exp. 0.1% (Prev. 0.2%).
UK Core Inflation Rate YoY (Jun) Y/Y 2.6% vs. Exp. 2.5% (Prev. 2.6%).
UK Core Inflation Rate MoM (Jun) M/M 0.3% (Prev. 0.3%).

CENTRAL BANKS

BoJ officials are reportedly considering hiking rates faster than every 6 months due to the JPY's weakness adding to upside inflation risks, Bloomberg reported. Some officials believe that it is important to scrutinise upside risks to inflation at this point. The source added that officials think the currency's impact on prices warrant close attention.

NOTABLE US HEADLINES

The US House will vote today on a plan to ban members from trading stocks, according to Fox.
The US House voted 220-205 to pass a stopgap measure to fund federal agencies through November elections.

GEOPOLITICS

MIDDLE EAST

US Secretary of State Rubio said China is displeased with Iran's actions in the Strait of Hormuz and that Iran is in "a lot" of trouble. Rubio added that China has been cooperative in Iran in some cases. Additionally, he said the Strait of Hormuz remains a key source of energy and that Iran can never possess nuclear weapons.
US Secretary of State Rubio said the US is committed to diplomacy in the Middle East and Iran, but added Iran is not serious about talks, while the US remains open and willing to engage in negotiations.
US Secretary of War Hegseth said we have multiple options for striking Iran's nuclear facilities in Jabal al-Fas.
US CENTCOM said forces conducted the 11th consecutive night of strikes against Iran in which they targeted Iranian military operations centres, maritime capabilities, aircraft hangars, drone storage facilities, and military logistics infrastructure to further degrade Iran's ability to threaten commercial shipping in the Strait of Hormuz. CENTCOM also stated that the Strait of Hormuz remains open to commercial traffic, with US forces facilitating the movement of approximately 900 vessels and 450mln barrels of crude since early May.
US strikes were reported on Behbahan, Mahshahr, Bandar Abbas, Chabahar, Bushehr, west of Tabriz and Urmia, while several explosions were heard in Iran's Tabriz. Furthermore, Arab media reported that missiles were fired from Kuwaiti territory to Iran and drone and missile attacks were reported on US bases in Kuwait and Bahrain. More recently, there were explosions heard in Sirik.
IRGC said it targeted a tactical radar complex near Ali Al-Salem base and another radar system in Bubiyan Island in Kuwait, while Iran's army also said it shot down a one-way attack drone in the country's northwest, according to Tasnim. Additionally, Iran’s military said it struck US targets at Jordan’s Azraq base and Bahrain’s Sheikh Isa Air Base, according to Iranian state media.
Iranian Interior Ministry spokesperson said there is currently no ongoing negotiation and that it may only involve the exchange of messages, Mehr News reported.
Iranian Army Commander-in-Chief said Iran controls the Hormuz Strait and will fire upon American forces, Press TV reported.
Iran's top joint military command warned that all interests of the US and its allies in the region will be targeted if the US attacks Iran's nuclear sites.
Iranian lawmaker Qashqavi said US President Trump's claim about Iran's request for negotiations is not true.
Pakistan is said to have sought USD 10bln in US funding after mediating talks with Iran, sources said.
Explosions were reported in Israel's Eilat during Iran's missile strike on Jordan's Aqaba, N12 reported.
Only 3 cargo ships crossed the Strait of Hormuz, according to reports citing Kpler data.

RUSSIA-UKRAINE

Ukrainian President Zelensky said Ukraine has struck logistics centres involved in the supply of drone components in Russia's Krasnodar and Stavropol regions.
Russia's Defence Ministry said its forces attacked a Ukrainian port and two vessels were struck at sea, according to TASS.

OTHER

US Secretary of State Rubio said the US disagrees with China's activities on Taiwan.

CRYPTO

Bitcoin pares back some of Tuesday's gains, falling back below the USD 66k mark.

APAC TRADE

APAC stocks traded mostly in the green following on from the tech-led rebound on Wall Street, which was facilitated by several positive sector-specific headlines, and heading into some of the Mag-7 earnings.
ASX 200 mildly gained amid strength in the commodity-related sectors, but with the upside capped by weakness in defensives, as well as domestic consumer and tech stocks.
Nikkei 225 initially rallied at the open amid AI-related optimism and after PM Takaichi's Cabinet approved its first comprehensive economic and fiscal policy guidelines on Tuesday, targeting JPY 370tln in combined public and private investment by 2040, while sentiment was also helped by the stronger-than-expected exports and imports data from Japan.
Hang Seng and Shanghai Comp were ultimately mixed, with underperformance in the Hong Kong benchmark in a resumption of the rotation out of hyperscalers.

NOTABLE ASIA-PAC HEADLINES

Japanese Finance Minister Katayama said she won't comment on specific FX levels, but reiterated will take appropriate action on FX as needed and that they can take bold steps anytime as needed.
China is said to have told all market participants not to re-discount bills at rates below 0.5%, sources said.

NOTABLE APAC DATA RECAP

Japanese Balance of Trade (Jun) -406.9B vs. Exp. -120B (Prev. -378.7B).
Japanese Exports YoY (Jun) Y/Y 19.3% vs. Exp. 18.6% (Prev. 17%).
Japanese Imports YoY (Jun) Y/Y 25.4% vs. Exp. 21% (Prev. 12.5%).