Oil rises on Strait of Hormuz fishhooks; US jobs data looms

Oil prices were back on the rise as Iran said it agreed to a shipping route through the Strait of Hormuz with Oman, but wouldn’t ensure safe passage while the US naval blockade remained in place.

Higher energy prices and looming US employment figures kept the mood uneasy in US and European stock markets, with Wall Street broadly weaker as surging sales for memory companies Sandisk and Western Digital still fell short of hyped expectations, while Alphabet dipped on its latest plans to tap bond markets for its artificial intelligence ambitions.

The US Federal Communications Commission lifted its national cap on television-station ownership, while the UK government cleared Paramount Skydance to buy Warner Bros Discovery, with legal challenges in the US set to be heard next year.

And Australian futures are pointing to a modestly positive start to the trading day for the S&P/ASX 200 index, which is on track for its best week since April, while T&G Global is due to report its first-half earnings on this side of the Tasman and the Fisher Funds-managed Kingfish investment company holds its annual meeting in Auckland today.

A narrow path

Brent crude oil futures rose 3.3% to US$82.38 a barrel as Iran and Oman agreed to a shipping route for the Strait of Hormuz, with the Islamic Republic saying it wouldn’t fully reopen the channel while the US blockade remained in place. Iran was reported to be considering legislation to ban US, Israeli and other hostile vessels from going through the strait, with fines of up to 20% of a ship’s cargo for breaching the restrictions.

Wall Street was broadly weaker, with the Dow Jones Industrial Average down 0.8%, led lower by Salesforce, Boeing and Honeywell International, while the S&P 500 dipped 0.1% and the Nasdaq Composite was flat.

Memory companies Sandisk and Western Digital tumbled with investors unimpressed by the firms’ increased quarterly sales, while Alphabet declined amid reports it planned to sell between US$20 billion and US$25 billion of bonds to help fund its AI capital spending plans.

“AppLovin plunged almost 19%, Datadog fell nearly 18%, Western Digital dropped almost 12%, while Sandisk lost around 5% despite reporting strong revenue growth as investors judged guidance against exceptionally high expectations,” Moomoo market strategy consultant Greg Boland said in a note. “Defensive sectors including healthcare and industrials outperformed, helping cushion broader market weakness.”

Borrowing to buy

Meanwhile, Japan’s SoftBank Group reported an 18% decline in quarterly profit on smaller gains from its technology funds business. The tech investor used its stake in OpenAI to borrow US$10 billion from a banking syndicate, which it then used to fund an even larger stake in the ChatGPT maker.

SpaceX rose 2.7% to US$111.23 on heavy trading as the first tranche of locked-up shares hit the market.

The US FCC cleared the way for consolidation of broadcasters in a split vote to repeal the national cap banning firms from owning more TV stations reaching more than 39% of US households, and said it would review acquisitions on a case-by-case basis.

Versant Media rallied despite reporting a decline in quarterly sales, while Paramount and Warner Bros Discovery both advanced after the UK government cleared their merger.

Across the Atlantic, markets were mixed with the UK’s FTSE 100 dipping 0.2%, Germany’s DAX nudging up 0.1% and France’s CAC 40 increasing 0.4%.

Germany’s RWE agreed to a US$1.22 billion settlement with the US Interior Department to relinquish its offshore wind leases off the coasts of New York, California and Louisiana, while Australia’s Victoria premier Ben Carroll told the Australian Financial Review that he was seeking more advice on offshore wind.

The kiwi dollar traded at 58.73 US cents at 7am in Auckland from 58.80 cents yesterday ahead of US non-farm payrolls data, which are expected to show the US added 80,000 jobs last month.

Futures are pointing to a 0.1% gain for the ASX 200 when trading opens across the Tasman, with the Australian benchmark up 3.3% so far this week. New Zealand’s NZX 50 is up 1.9% so far this week, and Moomoo’s Boland expects a soft start to the trading session on this side of the Tasman, with no local data on the radar.

“The NZX 50 is expected to open slightly lower after Thursday's modest pullback from record highs and softer US trading overnight,” Boland said. “Investors will closely watch Friday night's US employment report, which is likely to shape expectations for the Federal Reserve's September meeting and influence global equity sentiment heading into next week.”

Reporting by Paul McBeth. Image from Chris LeBoutillier on Unsplash.