Report by Renta 4
Markets opened without any major movements in Europe (Eurostoxx futures flat) and slightly up in the US (S&P futures up 0.15% and Nasdaq futures up 0.4%), following yesterday’s slightly bearish session, although with no major developments as the market awaits tomorrow’s inflation figures.
Yesterday saw a rise in yields across most sovereign yield curves, ranging from 4 to 10 basis points, against a backdrop of a surge in Brent crude, up more than 4.5 per cent to exceed $87.5 per barrel (it is trading slightly higher this morning), amidst renewed instability in the Middle East and the prospect of an agreement on the Strait of Hormuz receding.
Iran’s stance appears to be hardening, following the intensification of its demands for the reopening of the Strait of Hormuz, and the adoption of a tougher approach to the talks with the appointment of Mohsen Rezaei (until now a military adviser to the Supreme Leader) as Secretary of the Supreme National Security Council (a key body in Iran’s defence and negotiations), as well as the strengthening of the Supreme Leader’s representation within the council. This appointment highlights the growing influence of the military apparatus over the negotiations. Furthermore, Iran’s latest statement stands out, in which it asserts that any agreement with Oman regarding the Strait of Hormuz would not entail its full reopening, whilst Trump has stated in a post that he is demanding war reparations.
As for central banks, yesterday the president of the Fed in Cleveland (a voting member) stated that a single 25-basis-point rate rise might be insufficient to tackle current levels of inflation and that several rises would likely be needed, adding that current levels are not sufficiently restrictive to curb economic growth or contain rising prices. All eyes are therefore on the inflation figures due tomorrow, which will help us gauge the Federal Reserve’s next moves. For the time being, the market is pricing in a 51 per cent probability of a rise to 375–400 basis points at the next meeting on 16 September (compared with 44 per cent the day before).
Meanwhile, the Bank of Australia has kept rates at 4.35% (a unanimous decision following a total of 75 basis points of rate rises this year), in line with expectations, but has sent a “hawkish” message, warning that price pressures remain high and that it could raise rates even further.
And amidst all this rising geopolitical tension, on the corporate front we continue to see a positive earnings season in both the United States and Europe, with EPS growth of 15% expected for Q2 2026, taking into account the remaining S&P 500 companies yet to report. This increase would represent the second-highest growth rate since 2021, supported by the energy and technology sectors. For 2H26, the consensus forecast expects amore moderate increase of 11.3 per cent, and 10.9 per cent for Q3 2026 and Q4 2026 respectively.
