Equities Surge, Oil Plunges 5.75% as Hormuz Tensions Ease; Gold Rises on Soft JOLTS Data

## Lead US equities closed significantly higher today, with the Nasdaq 100 ETF gaining 3.37% and the S&P 500 ETF up 1.77%. This broad market rally was fueled by a substantial 5.75% drop in WTI crude oil prices, as geopolitical tensions surrounding the Strait of Hormuz eased. Gold futures also saw a recovery, climbing on softer-than-expected JOLTS job openings data, which reduced the probability of a September rate hike. ## Session narrative US equities experienced a strong rally today, with all major indices closing significantly higher. The S&P 500 ETF (SPY) rose 1.77%, while the Nasdaq 100 ETF (QQQ) led the gains with a 3.37% increase. The Dow ETF (DIA) also advanced 1.74%, and the Russell 2000 ETF (IWM) was up 1.88%. This market optimism was largely driven by a significant de-escalation of geopolitical tensions in the Middle East, specifically concerning the Strait of Hormuz. WTI crude oil futures (CL) plunged 5.75%, reaching their lowest level since July 10, as reports indicated planned strikes on Iran were called off and de-escalation was urged. This unwinding of the 'war premium' eased inflation concerns and boosted risk appetite. In the rates market, the US 10-year yield (TNX) fell 1.26%, while long-duration Treasuries (TLT) gained 0.83%. Gold futures (GC) saw a recovery, climbing 1.12% after June JOLTS job openings data came in softer than expected, falling to 7.359 million against a forecast of 7.440 million. This cooling labor demand reduced the perceived likelihood of a September FOMC rate hike to 54.82%. The US Dollar Index (DXY) saw a marginal decrease of 0.02%. ## Cross-asset check Equity markets saw broad-based gains, with technology leading the way. The Nasdaq 100 ETF (QQQ) was a standout performer, reflecting strong risk-on sentiment. In commodities, crude oil experienced a sharp decline due to easing geopolitical concerns, while gold benefited from softer labor data and reduced rate hike expectations. Rates markets reacted to the JOLTS data, with the 10-year yield moving lower and long-duration Treasuries gaining. The dollar was relatively stable, showing a slight depreciation. ## Themes & continuing stories The primary theme driving today's market action was the de-escalation of geopolitical tensions in the Middle East, particularly concerning the Strait of Hormuz. This development had a direct and significant impact on crude oil prices, which saw a substantial decline. Another key theme was the cooling labor market, as evidenced by the softer JOLTS data. This has implications for the Federal Reserve's monetary policy path, with market participants now pricing in a lower probability of a September rate hike. Continuing stories include monitoring the ongoing geopolitical situation and any further developments regarding the Strait of Hormuz agreement, as well as tracking upcoming labor market indicators to confirm the trend of cooling demand. ## What’s ahead Looking ahead, market participants will be closely watching upcoming API and EIA inventory reports for further insights into domestic crude supply levels. These reports could provide additional direction for oil prices. Furthermore, the upcoming ADP and non-farm payroll reports will be crucial for confirming labor market weakness. Stronger evidence of a cooling labor market could further influence the Federal Reserve's monetary policy decisions and impact dollar strength, potentially providing additional support for gold. Traders will also continue to monitor any further developments regarding the Strait of Hormuz agreement and its implications for global oil supply.