Today’s Outlook :
▫️ US MARKET : U.S. stocks closed lower on Tuesday after oil prices rose following an Iranian official’s statement that the Strait of Hormuz would not be reopened until Tehran’s conditions were met. Investors remained in a wait-and-see mode ahead of inflation data that could affect the Fed’s monetary policy outlook. The S&P 500 fell 0.4% to 7,725.76, the Nasdaq declined 0.6% to 26,445.45, and the Dow Jones fell 0.3% to 53,791.97.
Uncertainty over the reopening of the Strait of Hormuz remained a key concern. Iran is demanding the lifting of the U.S. naval blockade, removal of sanctions, and compensation for war-related damage before the strait is reopened. Meanwhile, the U.S. and Iran were reportedly nearing a peace deal, with Oman and Pakistan serving as mediators.
Market focus has now shifted to the U.S. July CPI data due Wednesday. The data has become increasingly important after the U.S. unexpectedly lost 23k jobs in July, while May and June data were significantly revised lower. A renewed rise in energy prices could complicate the Fed’s policy outlook, as higher inflation could prompt rate hikes, although at the risk of weighing on the labor market and economic growth.
▫️ EUROPEAN MARKET: European equities traded mixed on Tuesday as investors monitored a surge in oil prices and the breakdown of peace negotiations in the Middle East amid an earnings season that is increasingly testing high valuations in technology and AI stocks.
The STOXX Europe 600 Index closed relatively flat, just below its record high. Energy stocks gained as oil prices reached their highest level since July 31, while capital goods, media, and technology sectors weakened. Germany’s DAX rose 0.3%, France’s CAC 40 fell 0.1%, the U.K.’s FTSE 100 declined 0.2%, and Italy’s FTSE MIB rose 0.1%. The limited market movement reflected growing investor caution after repeated rallies were halted by deadlocks in Middle East negotiations.
The European earnings season remained broadly solid, particularly in healthcare, power infrastructure, and defense. However, technology and industrial sectors are receiving increasing scrutiny, especially after earnings reports from hardware companies triggered volatility in semiconductor stocks. Investors are also becoming more cautious about high AI infrastructure spending without clear revenue visibility, amid inflation risks from higher energy prices and slowing global growth.
▫️ ASIAN MARKET: Asian stocks traded mixed on Tuesday, with South Korean and Singaporean stocks leading gains, while investors monitored the Reserve Bank of Australia’s (RBA) decision to keep interest rates unchanged, as well as renewed concerns over inflation and oil prices. South Korea’s KOSPI rose 0.8% to around 6,348, supported by gains in semiconductor stocks, particularly Samsung Electronics, which surged 6%.
TSMC shares rose around 0.8% after July sales increased 45% YoY, signaling strong demand for AI-related semiconductors. Sentiment toward the technology sector also remained positive amid continued evidence of strong AI demand.
Meanwhile, Nvidia announced a partnership with six major financial institutions to launch compute-financing platforms aimed at raising more than USD500 billion in third-party capital for AI infrastructure.
Chinese markets tended to weaken, with the CSI 300 down 0.2%, the Shanghai Composite relatively flat, and Hong Kong’s Hang Seng down 0.7%.
▫️ COMMODITIES : Oil prices held near a one-week high on Tuesday as the market assessed developments in negotiations between Oman and Iran over shipping routes through the Strait of Hormuz, while disruptions to energy flows from the Middle East and Russia continued.
Brent rose 12 cents, or 0.1%, to USD87.84 per barrel, while WTI gained 7 cents, or 0.1%, to USD82.20 per barrel. On Monday, both benchmarks closed at their highest levels since July 31.
A spokesperson for Qatar’s Ministry of Foreign Affairs said negotiations between Oman and Iran over shipping through the Strait of Hormuz had entered an advanced stage. The development came a day after an exchange of demands between the U.S. and Iran complicated efforts to reopen the strait. Before the Iran war began on February 28, around 20% of global oil supplies passed through the Strait of Hormuz.
▫️ INDONESIA: The IHSG closed down -1.53% at 6,267.88 on Tuesday. Market pressure increased as investors adopted a wait-and-see stance and reduced positions ahead of the MSCI announcement scheduled for later today local time, or in the early hours of Indonesia time. This led market participants to become more defensive and increased IHSG volatility.
On the domestic front, the market is also still monitoring developments regarding the candidates for Bank Indonesia Governor. President Prabowo Subianto has nominated Destry Damayanti as the sole candidate for BI Governor. Market expectations toward the nomination are relatively positive, as she is considered capable of maintaining policy continuity and Bank Indonesia’s independence. Citi also expects the parliamentary fit and proper test process to take place either before or after the BI policy meeting on August 19.
For today, investors should remain cautious of volatility ahead of the MSCI announcement. Technically, the 6,200 area remains an important level as base support. As long as the IHSG can hold above this area, the opportunity for a technical rebound remains open, although the market is likely to remain defensive until there is clarity on the MSCI catalyst.
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