Equities Jump To Fresh Records on Hormuz Optimism, Upbeat Earnings: Aug. 4, 2026

Optimism about an imminent reopening of the Strait of Hormuz combined with upbeat corporate earnings has stocks soaring to fresh records. Hopes for a longer-lasting ceasefire were bolstered by Secretary Scott Bessent commenting that Oman and Iran are in final discussions to reopen the critical waterway by today or tomorrow. The remarks are driving crude prices and interest rates south as market participants adjust their oil supply outlooks upwards while reducing inflation expectations and Fed hike probabilities as a result of a greater likelihood of softening cost pressures stemming from restored traffic through the passage. The economic calendar helped propel Treasury gains too, as weaker-than-expected job openings and factory orders were additionally conducive to lighter yields. In equities, the rally is being dominated by semiconductors and the Mag7 after Palantir’s quarterly numbers lifted confidence that there’s an extended runway ahead for AI-powered profitability growth. Indeed, of the 11 principal sectors, only tech, materials, financials and industrials are advancing. Meanwhile, the defensive real estate, utilities, consumer staples, and healthcare sectors are getting battered alongside energy, which is sinking of course on cheaper gasoline and natural gas. Precious metals are gaining though, against the backdrop of looser financial conditions. Elsewhere, the greenback and volatility protection instruments are steady.

Job Openings Ease, but Labor Market Stability Persists

Employer demand for workers cooled slightly at the start of the summer although overall conditions remained stable. The Job Openings and Labor Turnover Survey (JOLTS) printed a strong headline number of 7.359 million vacancies, but it was nonetheless below both the expected 7.4 million and the prior month’s downwardly revised 7.537 million. Despite the modest decline, the statistic was the loftiest since January 2025 when excluding April and May’s figures. For the month, contractions of 147k, 86k, 74k and 71k across the health care/social assistance, leisure/hospitality, wholesale trade and professional/business services sectors weighed on results. Conversely, the transportation/warehousing/utilities, financial activities, retail and information industries countered some of the negative effects with increases of 97k, 58k, 49k and 18k.

Markets Need Follow Through on Iran to Rally Further

Wall Street is going to need follow through on Iran to rally further as a heavy amount of optimism has been priced into markets in the past two sessions. And with all four major equity benchmarks already sporting notable year-to-date gains well above 10%, the opportunity for outperformance from here will likely come from Treasuries. Indeed, a deal in the Middle East would plunge crude oil costs below $70 per barrel, a development that would bury inflation expectations while delivering strong capital appreciation dollars for holders of duration, with the 10- , 20- and 30-year maturities standing to benefit the most in this scenario. Those instruments are poised to see their rates decrease 15 basis points on a positive geopolitical announcement, while equities would probably gain a more modest 1% on the news. An unfortunate return to escalation, however, would lift yields materially, put pressure on the Fed to hike, and challenge the relentless run we’ve seen in stocks. Other key and potentially influential events are three consecutive days with additional releases of labor data, with weaker than-expected figures that mirror the footsteps of this morning’s JOLTS bolstering fixed-income, although statistics that are too weak could raise slowdown concerns and hurt risk appetites while expanding safe-haven demand, which would also elevate bond valuations.

International Roundup

Inflation Cools Slightly in South Korea

South Korea’s price pressures eased last month but were still fairly stronger than during the spring, according to the Consumer Price Index. After posting 3.1% and 3.2% year-over-year (y/y) climbs in May and June, the gauge rose only 2.8% y/y as of July. Economists anticipated a 3% ascent. Core inflation, which excludes food and energy, furthermore, was up 2.6% y/y but was hotter than June’s 2.5% y/y rate. Despite the softening headline price pressures, July’s CPI was still hotter than January through April when the gauge posted monthly y/y gains ranging from 2% to 2.6%. The month-over-month (m/m) print, meanwhile, depicted stickers falling 0.2%, but when excluding food and energy, the CPI rose 0.4% after the flat June print. Economists anticipated the broad measurement to produce a repeat of June’s 0.1% ascent.

Within the headline m/m CPI, lower energy costs brought on by the temporary ceasefire in the US-Iran war contributed to the negative result. Indeed, prices for the transport classification and the housing, water, electricity, gas and other fuels group slipped 1.6% and 1.1%, respectively. They were joined by the 0.3% and 0.2% declines for the alcoholic beverages and tobacco category and the food and non-alcoholic beverages segment. Categories that became more expensive and the extent of their changes included the following:

• Recreation and culture, 0.7%
• Restaurants and hotels, 0.7%
• Clothing and footwear, 0.2%
• Furnishings, household equipment and routine maintenance, 0.2%
• Miscellaneous goods and services, 0.2%
• Communication, 0.1%

Canada Trade Surplus Grows

Canada’s merchandise trade surplus expanded from C$3.7 billion in May to C$3.86 billion in June, blowing past the C$3 billion estimate from a consensus of economists, according to Statistics Canada. It was the fourth consecutive month of exports exceeding imports and the highest surplus in four years. The value of products shipped beyond the country’s borders grew from C$77.19 billion in May to C$77.49 billion in June while imports climbed from C$73.49 billion to C$73.63 billion. Energy products were headwinds with the overall category dropping 10%, but the weakness was primarily caused by lower prices. On a positive note, exports of unwrought precious metals climbed 28%, largely due to a spike in gold shipments to the U.K. Meanwhile, Japan, China, Finland and South Korea increased their purchases of copper ores and concentrates. Canadian automobile manufacturers, furthermore, increased their output, which allowed the volume of motor vehicles and parts delivered to foreign customers to expand. More broadly, Canada’s declining currency exchange rate also contributed to the export expansion. Regarding imports, the metric would have fallen if the country had not increased purchases of computers and related products from foreign markets.

Hong Kong Retail Sales Growth Slows

The value of retail sales in Hong Kong was up 4.6% y/y in June, a weaker showing than the 7.9% y/y expansion in May, according to the Census and Statistic Department. Some of the strongest gains occurred with the jewelry, watches, clocks and value gifts group and the other consumer goods not elsewhere classified with transactions leaping 20.1% and 9.3%.  The food, alcoholic drinks and tobacco followed with a 2.5% advance and was trailed by the 0.8% and 0.6% growth for the wearing apparel category and the medicines and cosmetics classification. Supermarkets and department stores, conversely, experienced declines of 1.1% and 4.2%. Softness also occurred in the motor vehicles and parts segment and the fuels categories with transactions retreating by 4.3% and 15.3%