US stocks retreated, while oil prices and yields climbed as Hormuz optimism faded - Newsquawk Daily Asia-Pac Market Open

US stocks were sold on Thursday with the Dow and Russell lagging, while S&P and Nasdaq saw mild losses, with the latter paring from its post-open lows. There were several key earnings last night and this morning, with Sandisk (SNDK -6.7%) and Western Digital (WDC -13%) under pressure after issuing weak guidance, while Datadog (DDOG) is down 19% after investors were left underwhelmed despite another earnings beat, wiping out all of the stock's gains since the end of June. AppLovin (APP) also tumbled. Oil prices moved higher as tensions between the Houthis and Saudi Arabia escalated, while the initial Iranian reporting on the proposed Iran-Oman framework suggested terms viewed as unfavourable to the US and its allies, raising doubts over the prospects of a final agreement and rebuilding some geopolitical risk premium in crude. Meanwhile, post-settlement Tasnim reported explosions heard in Qeshm Island were due to hostilities at the entrance of the Strait of Hormuz - seeing crude move higher.USD was firmer against all major peers as positive correlation increased with short-end US Treasury yields. Higher oil prices were partially behind the move higher today in yields amid the wait for the expected reopening of the Strait of Hormuz; tensions between the Houthis and Saudis worsened, while initial reports of the Iran-Oman management deal for the Strait of Hormuz contain unfavourable terms towards the US and the GCC. Elsewhere, FT reported that Fed Chair Warsh is willing to hike in September if inflation prints in the coming weeks are hot and markets increase expectations for such a move, sources said. Meanwhile, US data was met with a muted reaction. Claims were little changed W/W, Challenger Layoffs eased, and Unit Labour Costs eased more than expected in Q2.Looking ahead, highlights include Japanese Household Spending, FX Reserves & Leading Index, Philippines GDP.More Newsquawk in 2 steps:1. Subscribe to the free premarket movers reports2. Trial Newsquawk’s premium real-time audio news squawk box for 7 daysLOOKING AHEADHighlights include Japanese Household Spending, FX Reserves & Leading Index, Philippines GDP.Click for the Newsquawk Week Ahead.IRAN CONFLICTUS President Trump thinks the war with Iran will end pretty soon and said the Strait of Hormuz is sort of open right now.US President Trump was reportedly scheduling a phone call with Saudi Crown Prince Mohammed bin Salman to discuss Iran matters, US officials told CBS News.US official said the Strait of Hormuz is an international waterway, and that no one party controls the lanes or transits through them, while the official added that temporary routes will be without impediment.Informed sources stated that the reason for the sound of two explosions heard in Qeshm was the confrontation with hostile enemy targets at the entrance to the Strait of Hormuz, according to Tasnim.Iran and Oman agreed on the broad framework for Strait of Hormuz reopening talks, according to Al Arabiya sources, while an announcement could come within days, although the agreement still needs the approval of Iran's National Security Council. The proposed 60-day agreement aims to resume navigation, with ships entering the Strait of Hormuz using the shipping lane closest to Iran and departing via the maritime passage closest to Oman. Furthermore, the proposal does not include imposing passage fees or service charges on ships.The strategic plan for managing the Strait of Hormuz would reportedly prohibit the passage of vessels belonging to the US, Israel and other hostile countries through the Strait of Hormuz. Countries and individuals that caused damage to Iran would not receive permission to pass through the Strait of Hormuz and the Persian Gulf until compensation is paid, while heavy fines, including up to 20% of the value of goods, would be imposed on violators. The plan remains in the expert review stage, with parliament requesting experts submit suggestions to complete it.An Omani-Iranian statement is expected to be issued soon regarding a temporary transit corridor in the Strait of Hormuz, according to Al Arabiya sources. The temporary passage would remain in place until permanent transit arrangements are finalised.An informed source said that under the framework of negotiations between Iran and Oman, entry into the Strait of Hormuz is to be carried out through the northern corridor near the Iranian coast, while ships would exit through the southern corridor near the Oman coast. After the specified deadline, passage through both the northern and southern corridors would stop, with all traffic moving through the middle corridor, where inbound traffic would be managed by Iran and outbound traffic jointly managed by Iran and Oman.Iranian Foreign Minister Araghchi's visit to Pakistan is expected by the end of the week or early next week, according to Al Arabiya sources.Iranian Parliamentary Speaker Ghalibaf said to the US, "Acknowledge the facts and fulfil your commitments. We don’t need more theater."Indirect contacts between the US and Iran have entered the final stage, according to Al Arabiya sources, while Pakistan and Qatar continue to facilitate communications between Tehran and Muscat behind the scenes. However, an Iranian journalist claimed reports of indirect US-Iran contacts through intermediaries were false, adding that Iran-Oman negotiations are bilateral and the draft understanding concerns transit through Hormuz rather than its reopening.Israeli military said it targeted Hezbollah positions in southern Lebanon over the past 24 hours and will maintain its deployment in the security zone in southern Lebanon in line with the agreement, according to Al Arabiya.Yemeni Houthis said armed forces carried out a large-scale specialised military operation targeting Saudi troop concentrations in Al-Ruwaik, Al-Abr, Al-Thaniyah and other camps. The group also said it would continue the "blockade for blockade" equation until the blockade on Yemen is lifted, adding that a large number of Saudi camps, troop concentrations, warehouses and weapons depots in the Al-Wadiah area were destroyed and set ablaze.Saudi forces' command centres on the Yemeni border were targeted, according to IRNA.Saudi source said reliable intelligence reports indicate coordination between Houthi and Iraqi militias and the Revolutionary Guard to attack the Kingdom, while they will not hesitate to take all necessary measures to deal with any aggression. Furthermore, Saudi Arabia has observed drones and missiles being moved, suggesting potential coordinated attacks from the north and south that could target civilian and economic sites, including energy infrastructure, ports and airports.US TRADEUS stocks were sold on Thursday with the Dow and Russell lagging, while S&P and Nasdaq saw mild losses, with the latter paring from its post-open lows. There were several key earnings last night and this morning, with Sandisk (SNDK -6.7%) and Western Digital (WDC -13%) under pressure after issuing weak guidance, while Datadog (DDOG) is down 19% after investors were left underwhelmed despite another earnings beat, wiping out all of the stock's gains since the end of June. AppLovin (APP) also tumbled. Oil prices moved higher as tensions between the Houthis and Saudi Arabia escalated, while the initial Iranian reporting on the proposed Iran-Oman framework suggested terms viewed as unfavourable to the US and its allies, raising doubts over the prospects of a final agreement and rebuilding some geopolitical risk premium in crude. Meanwhile, post-settlement Tasnim reported explosions heard in Qeshm Island were due to hostilities at the entrance of the Strait of Hormuz - seeing crude move higher.SPX -0.18% at 7,710, NDX -0.39% at 29,373, DJI -0.85% at 53,890, RUT -0.58% at 3,002.Click here for a detailed summary.TARIFFS/TRADEUS reportedly considers delaying collection of planned polysilicon tariffs, and is considering an implementation period of 90-120 days, according to reports.Canadian PM Carney said he spoke with US President Trump last week and will speak with him again when necessary, while Canadian negotiators in Washington are holding detailed talks with their US counterparts. He added Ottawa is standing up for Canadian businesses.NOTABLE HEADLINESFed Chair Warsh is to stick with lean Fed messaging despite backlash, according to the FT citing sources. The report added that Warsh would be willing to hike rates in September if inflation prints over the coming weeks are hot and markets increase expectations for such a move, while sources said Warsh acknowledged mistakes had been made in the first few weeks but that they did not warrant a reversal of the communication strategy.DATA RECAPUS Unit Labour Costs Prelim (Q2) Q/Q 1.3% vs. Exp. 2.0% (Prev. 1.8%)US Challenger Job Cuts (Jul) 33.429k (Prev. 45.849k)US Initial Jobless Claims (Aug 1) 199k vs. Exp. 201k (Prev. 197k)US Continuing Jobless Claims (Jul 25) 1.801mln vs. Exp. 1.790mln (Prev. 1.782mln)Revelio Labs Nonfarm Payrolls (Jul) 79.2k (Prev. +258.5k, Rev. +125.4k)FXUSD was firmer against all major peers as positive correlation increased with short-end US Treasury yields. Higher oil prices were partially behind the move higher today in yields amid the wait for the expected reopening of the Strait of Hormuz; tensions between the Houthis and Saudis worsened, while initial reports of the Iran-Oman management deal for the Strait of Hormuz contain unfavourable terms towards the US and the GCC. Elsewhere, FT reported that Fed Chair Warsh is willing to hike in September if inflation prints in the coming weeks are hot and markets increase expectations for such a move, sources said. Meanwhile, US data was met with a muted reaction. Claims were little changed W/W, Challenger Layoffs eased, and Unit Labour Costs eased more than expected in Q2.EUR gradually retreated amid the firmer buck and with the single currency not helped by disappointing EU retail sales data.GBP sits around today's trough but with downside limited after a choppy performance.JPY lost out to the dollar due to a more attractive US yield environment, with USD/JPY returning to above the 158.00 level, while technicians flagged 158.57 as a key fib level, which it approached before paring.Banxico kept rates on hold at 6.50%, as expected, with the decision unanimous, while it maintained guidance. Banxico stated, "Looking ahead, the Governing Board estimates that it will be appropriate to maintain the reference rate at its current level." It also stated that the balance of risks for the trajectory of inflation within the forecast horizon remains biased to the upside, while it added that both headline and core inflation are still expected to decline throughout the forecast horizon, albeit more gradually than previously anticipated.Czech CNB Interest Rate Decision 3.75% vs. Exp. 3.75% (Prev. 3.75%)FIXED INCOMET-notes were lower and Treasury yields rose on higher oil prices, hawkish Fed reports, strong economic data and Alphabet's bond sale.COMMODITIESOil prices settled higher as tensions between the Houthis and Saudis grew, whilst the initial Iranian reporting on the text of the Iran-Oman deal showed unfavourable terms for the US and peers.Saudi Arabia set its September Arab Light crude OSP for Asia at a USD 2/bbl discount to the Oman/Dubai average.GEOPOLITICALOTHERUS issued fresh Cuba-related sanctions.North Korea fired an unidentified projectile toward the East Sea, according to South Korea's military.ASIA-PACNOTABLE HEADLINESJapan is to weigh changes to the proprietary trading cap as volume soars, reports Nikkei. "Japanese financial authorities will explore changing a rule that separates proprietary trading systems from full-fledged securities exchanges, Nikkei has learned, as the popularity of these alternative platforms grows."Toyota Motor (7203 JT) is to suspend 17 production lines across nine factories in Japan on Friday due to an approaching typhoon, according to Kyodo.China's DeepSeek resumed its second funding round, according to The Information citing sources. Separately, the company plans a significant increase in API pricing for AI models, according to its website.EU/UKNOTABLE HEADLINESECB's Nagel is reportedly gaining ground in the race for the ECB presidency, according to Bloomberg. Germany's Finance Minister supports Nagel, although Chancellor Merz has yet to back the Bundesbank President. Sources added that while Nagel has only a slim chance of securing the role, his candidacy could provide leverage in negotiations over other key positions.DATA RECAPUK S&P Global Construction PMI (Jul) 44.7 vs. Exp. 41.5 (Prev. 38.4)EU S&P Global Construction PMI (Jul) 44.3 (Prev. 42.8)EU Retail Sales (Jun) M/M -0.3% vs. Exp. 0.2% (Prev. 0.2%)EU Retail Sales (Jun) Y/Y 0.7% vs. Exp. 1.0% (Prev. 1.6%)Loading...