Equities Rally, Oil Plunges 5.3% Amid Easing Geopolitical Tensions; Palantir Soars on Strong Earnings

Lead US equities closed significantly higher today, with the S&P 500 ETF gaining 1.53% and the Nasdaq 100 ETF up 1.72%. This broad market rally was supported by a substantial 5.31% drop in WTI crude oil prices, easing inflation concerns. Geopolitical tensions appeared to de-escalate, despite Iran rejecting a US proposal on the Strait of Hormuz. Palantir Technologies surged after reporting strong Q2 earnings, beating estimates and raising guidance. Session narrative US equities saw a strong rally today, with all major indices closing up over 1.3%. The S&P 500 ETF rose 1.53%, the Nasdaq 100 ETF gained 1.72%, and the Dow ETF increased by 1.32%. The Russell 2000 ETF also performed well, up 1.71%. This positive sentiment was largely driven by a significant decline in crude oil prices, with WTI crude falling 5.31% and Brent crude down 4.79%. The drop in oil prices helped alleviate inflation fears, leading to a rally in both stocks and bonds. The US 10-year yield decreased by 1.24%. Geopolitical news was mixed but generally perceived as less escalatory; Iran reportedly rejected a US proposal regarding the Strait of Hormuz, yet negotiations were suggested to be making progress. On the corporate front, Palantir Technologies was a standout performer, posting an "otherworldly" Q2 double beat and raising guidance, which sent its shares trending higher. Other notable corporate news included several M&A activities and earnings reports. Cross-asset check Equity markets across the board posted strong gains. The S&P 500 futures were up 1.49%, Nasdaq futures gained 1.79%, and Dow futures increased 1.44%. The Russell futures also saw a significant jump of 1.80%. In fixed income, the US 10-year yield fell 1.24% to 4.69%, indicating reduced inflation concerns and a flight to safety or anticipation of less aggressive monetary policy. Long-duration Treasuries (TLT) were down 0.04%. The US Dollar Index (DXY) was largely flat, up 0.03%. Major currency pairs saw some movement, with EUR/USD down 0.15% and GBP/USD down 0.43%. USD/JPY was down 0.20%, despite reports of Japan and US intervening in the yen market. Commodities were dominated by the sharp decline in oil prices, with WTI crude down 5.31% and Brent crude down 4.79%. Gold saw a slight gain of 0.02%, while silver was up 0.80% and copper gained 1.26%. Natural gas was up 0.69%. Themes & continuing stories The primary theme today was the broad market rally, fueled by a significant drop in crude oil prices and a perceived easing of geopolitical tensions. Despite Iran rejecting a US proposal to open the Strait of Hormuz, reports suggested negotiations were making progress, contributing to the positive sentiment. Corporate earnings also played a crucial role, with Palantir Technologies' strong Q2 results boosting investor confidence. Continuing stories include the ongoing geopolitical landscape, particularly the US-Iran war and the conflict in Ukraine, which continue to influence market sentiment and energy prices. The US labor force dynamics, including a reported 720,000 Americans exiting the workforce, also remain a focus for economic observers. What’s ahead Looking ahead, market participants will be preparing for the US NFP report scheduled for Friday, August 7th. This key economic data point will provide further insights into the health of the US labor market and could significantly influence future monetary policy expectations. Geopolitical developments, especially concerning the Strait of Hormuz and the broader Middle East, will also remain under close watch for any potential impact on energy markets and global stability.