MARKET WRAPS

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Opening Call:

European stock futures were higher in tandem with gains in Asian equities. U.S. Treasury yields and the dollar edged lower. Gold and oil advanced.

Equities:

Stock futures in Europe rose at the start of a fresh week, as traders continue to parse corporate earnings and track developments in the Middle East. Talks between the U.S. and Iran to end hostilities have stalled. President Trump on Friday suggested that the U.S. could take over the Strait of Hormuz once the war ends.

"My sense is that investors are experiencing headline fatigue at this point," said Mizuho's Daniel O'Regan. "Similar to how the Russia-Ukraine war gradually became background noise for markets, the tape is no longer swinging 1-3% on every Iran-related headline. That's probably a healthy sign."

Investors this week will also be tracking the minutes of last month's Federal Open Market Committee meeting, due Wednesday, for details on how Fed members view inflation and the interest-rate environment.

Forex:

The U.S. dollar weakened slightly amid reduced Fed rate-hike expectations that could bolster risk appetite. These expectations are driven by benign inflation and softer labor market data in the U.S., strategists at OCBC Group Research said.

"Markets now price only a 30% probability of a Fed hike next month, down from around 55% before the July [U.S.] jobs report." However, "the Fed will receive another round of CPI and employment data before its September meeting," the strategists added.

Bonds:

The Bank of England's process of reducing its gilt holdings, also known as quantitative tightening, could add to gilt-market volatility, Tickmill Group's Patrick Munnelly said. The BOE is widely expected to slow the pace of gilt sales and redemptions to around 50 billion pounds ($67.4 billion) for the 12-month period starting in October, from 70 billion pounds currently.

"Even if designed carefully, quantitative tightening could keep gilt-market sensitivity elevated at a time when fiscal policy, inflation and growth are all under scrutiny," Munnelly said.

Energy:

Oil prices were higher amid a deadlock in U.S.-Iran talks to reopen the Strait of Hormuz, a key waterway through which one-fifth of the world's oil is transported.

"Hopes of an imminent deal to resolve the Strait of Hormuz impasse have faded of late, as the U.S. and Iran have been digging in on their positions," said Amarpreet Singh of Barclays' Commodities Research.

Barclays maintains its Brent crude oil forecast of $96.00 per barrel for 2026.

Metals:

Gold advanced amid risk-on sentiment. Weaker-than-expected U.S. labor data and softer inflation prints eased concerns that the Federal Reserve will need to remain aggressively hawkish, the ANZ Research analysts said. Recent data also suggest hawkish market pricing could have peaked, while breakeven inflation expectations remain anchored near 2%, they noted.

Base metals rose. Metals face supply disruptions, with demand remaining resilient but vulnerable at higher prices, ANZ Research team said. Aluminum will likely remain supported above $3,000 a ton as market remains undersupplied, ANZ said, noting that China's output cap will constrain supply growth despite attractive margins.

Nickel prices have been supported by Indonesia's policy to tighten output, while Philippines' reliance on Chinese and Indonesian refiners is an additional constraint, it added.

Iron ore futures declined. The broader demand backdrop for the ferrous metal remains weak, said ANZ Research analysts, citing factors such as softer domestic consumption in China and elevated inventories.

"We believe only targeted policy support in China, focused on infrastructure and selective industrial measures, would support the market, with little prospect of reversing the structural decline in steel demand," they said.

Oversupply pressures could also intensify as supply from Australia, Brazil and new sources rise, which could increase downward price pressure over time, ANZ said.

TODAY'S TOP HEADLINES

Iran's Secret Plan to Escalate the War

After President Trump signed a memorandum of understanding with Iran in mid-June, administration officials fanned out to build support for an agreement they hoped would reopen the Strait of Hormuz and start winding down the war.

Iran's hard-line leaders huddled in Tehran and came up with a different plan, according to Iranian and Arab officials. In their view the pact was likely just an attempt by the U.S. and Israel to take pressure off the global economy and buy time for a bigger attack down the road. Instead of putting faith in talks, they took the past two months to prepare for a bigger fight.

Why Big Tech's AI Spending Is $3 Trillion Higher Than It Seems

Each quarter, big tech companies disclose their massive capital expenditures on artificial-intelligence infrastructure, from data centers to chips.

But those figures don't come close to expressing the full extent of future spending to which Google parent Alphabet, Meta Platforms, Oracle and many others have committed. That is because a huge swath of their coming financial obligations aren't reflected on their balance sheets.

Here's the real reason oil prices aren't moving higher

A still-blocked Strait of Hormuz. Tanker attacks. U.S.-Iran peace talks at an impasse.

Six months ago, any one of those factors would have sent oil prices back above $100 a barrel. But when confronted with these headlines in August, the energy market barely flinched.

Iran Says Pilots Missing After a Brazen Bombing Run Are Prisoners in Qatar

Iran accused Qatar of holding three of its air force pilots prisoner, deepening a mystery that dates back to the beginning of the war.

Just three days into the conflict, Qatar said it had shot down a pair of Iranian Sukhoi Su-24 warplanes that were threatening its airspace.

Open-Weight AI Won't Crimp Demand for Picks and Shovels

A wave of cheap and powerful Chinese open-weight AI models is causing a scare among investors in the AI boom. For a decent chunk of the tech universe, however, there is less to worry about than meets the eye.

The rapid advance of open-weight models, which make public a set of numerical values governing their behavior, is certainly a concern for closed-model developers. Those companies don't allow changes to how their models operate, giving them tighter control over how they respond to queries.

Elon Musk's SpaceX Holdings Revealed. (Hint: It's A Lot.)

SpaceX is a popular stock, backed by some investing and corporate heavy hitters. The heaviest hitter of all, of course, is Elon Musk.

The second quarter regulatory filings are in, disclosing who owns what. It's the first time public funds have disclosed SpaceX positions. (SpaceX started trading on June 12, after its record-setting IPO.)

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Expected Major Events for Monday 06:00/NOR: Jul External trade in goods

07:00/CZE: Jul PPI

07:00/SVK: Jun New orders in industry

08:00/BUL: Jul CPI

08:30/UK: S&P Global UK Consumer Sentiment Index

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