US stocks were lacklustre amid higher oil prices and as participants braced for key earnings - Newsquawk Daily Asia-Pac Market Open

• US stocks were little changed to lower on Wednesday, with the Russell 2000 leading the losses while the Nasdaq also underperformed ahead of big tech earnings after the close. Equities largely traded sideways throughout the session as investors awaited earnings results from Google (GOOGL), IBM (IBM) and Tesla (TSLA). Sector performance was mixed, with Utilities, Energy and Materials outperforming, while Consumer Discretionary, Communication Services and Health Care lagged.
• USD traded little changed as markets proved choppy through further geopolitical escalations, higher energy prices, and ahead of GOOGL earnings. US data and Fedspeak again took the backseat given the lack of data and the Fed being on blackout, keeping the Middle East conflict as the main focus.
• Looking ahead, highlights include South Korean GDP, Australian Employment Data, Singapore CPI, Supply from Australia.

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LOOKING AHEAD

• Highlights include South Korean GDP, Australian Employment Data, Singapore CPI, Supply from Australia.
• Click for the Newsquawk Week Ahead.

IRAN CONFLICT

• US President Trump posted on Truth Social that, "From this point forward, any time Iran shoots at a ship in the Strait of Hormuz, whether it be by Missile, Rocket, Drone, or any other device or weapon, the United States will bomb and destroy ONE BRIDGE OR POWER PLANT."
• US President Trump said Iran would pay a big price and reiterated Iran would not obtain a nuclear weapon, while he added that Americans were not against the war and the deaths of US soldiers were under investigation, with Iran to be held accountable.
• US President Trump posted on Truth Social an image of a headline reading, "Trump orders CENTCOM to 'open the gates of hell' after US troops killed, launches strikes on Iran", which was a headline from three days ago.
• US Secretary of State Rubio said China was displeased with Iran's actions in the Strait of Hormuz and that Iran was in "a lot" of trouble, adding that China had been cooperative on Iran in some cases. Rubio said the Strait of Hormuz remained a key source of global energy and reiterated Iran could never possess nuclear weapons. Furthermore, he said China did not want tolls imposed on international waterways such as the Strait of Hormuz, as well as stated that the US would welcome a diplomatic settlement with Iran, but had many options if Iran refused to negotiate.
• US CENTCOM redirected nine commercial vessels and disabled one vessel as of July 22nd.
• US missile strikes reportedly targeted Lark Island overlooking the Strait of Hormuz, while Iran's military said it struck US targets at Jordan's Azraq Air Base and Bahrain's Sheikh Isa Air Base. Furthermore, air raid sirens sounded at Al Aziz Airport in Saudi Arabia, while it was also reported that Iran targeted American military positions in eastern Jordan.
• Iran's top negotiator Ghalibaf said, "The equation of this war is clear: either all or none. In a region where we do not sell oil, no one will sell oil. If our security is not ensured, no infrastructure will be safe, and the security of the Strait lies in the absence of American forces." He added Iran had repeatedly said the situation in the Strait of Hormuz would not return to its pre-war state.
• Iran's Deputy Foreign Minister Gharibabadi said "European governments need to be aware that providing bases and territory to the aggressor will put them among the aggressors".
• Iran's Foreign Ministry said any aggression against Iran, including its infrastructure, will compel a powerful and decisive response, with its defence doctrine clear: eye for an eye. It added that those who contribute to such aggression, whatever the kind of support, will also be considered as legitimate targets.
• Iran's top joint military command said if the US acts on threats, Iran will stop all Gulf oil flow and target oil, gas, electricity and economic infrastructure in the region.
• Iranian Army Commander-in-Chief said Iran would fight with everything it had if the US set "feet in Iran", according to Tasnim. Separately, he said Iran controlled the Strait of Hormuz and would fire upon American forces, while Iran would secure the Persian Gulf by making practical use of its control over the Strait of Hormuz and would eliminate what he described as the enemy's abuse of the waterway.
• Iran's IRGC warned that if attacks continued, it was prepared to carry out a "regret-inducing operation" that would be followed by "an announcement of a general mourning in the United States." IRGC commander warned that Iran will cut off the electricity of US regional allies if its bridges or power plants are attacked.
• IRGC spokesperson warned shipping companies that the Strait of Hormuz southern route is mined, while the IRGC Navy warned against using alternative routes in the Strait of Hormuz.
• Iranian military source said the passage of ships through the Strait of Hormuz would remain safe if coordinated with Iran, while the source warned that if the US targeted an Iranian bridge or power plant, Iran would respond by striking infrastructure and bridges across the region, including energy facilities in which the US had interests.
• Iranian Interior Ministry spokesman said there were currently no negotiations with the US and that contacts may only involve the exchange of messages, while he added Iran had not presented any new message, according to Mehr News.
• Iranian lawmaker Qashqavi said President Trump's claim that Iran had requested negotiations was false.
• Iranian media reported US forces struck several fishing boats after allegedly mistaking them for IRGC speedboats, while four tankers changed course in the Red Sea on Wednesday, according to shipping data. Two of the vessels subsequently listed the Suez Canal as their next destination, while a car carrier altered course in the Gulf of Aden after previously signalling Saudi Arabia's Port of Jeddah as its destination.
• Israeli sources said the US had informed Israel it intended to escalate attacks on Iran and, for the first time during the current conflict, carry out strikes using heavy bombers.
• Israel is weighing possible entry into the war against Iran, but only under specific conditions, such as if Iran directly attacks Israel and the US approves, i24news reports.
• Mossad’s new director met with the CIA chief on Iran, while a purpose of the visit was to coordinate with the White House on negotiations with Iran on a nuclear deal, according to a source.
• US is investigating whether Russia assisted Iranian drone attacks on CIA sites in Gulf, according to reports, citing sources.
• Lebanese sources reported continued military actions by Israel in southern Lebanon, according to Nour News.

US TRADE

• US stocks were little changed to lower on Wednesday, with the Russell 2000 leading the losses while the Nasdaq also underperformed ahead of big tech earnings after the close. Equities largely traded sideways throughout the session as investors awaited earnings results from Google (GOOGL), IBM (IBM) and Tesla (TSLA). Sector performance was mixed, with Utilities, Energy and Materials outperforming, while Consumer Discretionary, Communication Services and Health Care lagged.
• SPX -0.14% at 7,499, NDX -0.54% at 28,998, DJI -0.01% at 52,224, RUT -0.92% at 2,960.
• Click here for a detailed summary.

TARIFFS/TRADE

• US Secretary of State Rubio said he discussed trade issues with China, including the Board of Trade.
• US Senate Committee was reportedly set to consider legislation aimed at cracking down on Chinese-connected vehicles.
• USTR Greer said there was an opportunity to use trade tools to protect domestic iron ore and taconite production through a phased approach that would reduce dependence on foreign steel inputs. Greer stated the US preferred negotiating with countries to secure aerospace supply chains and noted the Section 232 investigation was being handled by the Commerce Department, while he would support legislation to establish a travel and tourism working group under the USMCA.
• Brazil's Trade Minister Rosa said if necessary, the reciprocity law will be applied against the US.

NOTABLE HEADLINES

• Federal Reserve confirmed that Chair Warsh will hold a post-rate decision conference on July 29th.
• US House was reportedly set to vote on legislation banning members of Congress from trading individual stocks, according to Fox.
• OpenAI reportedly raised its projected cloud spending through 2030 to approximately USD 750bln from a previous projection of USD 600bln, reflecting new agreements with cloud-computing providers, according to the Wall Street Journal.

FX

• USD traded little changed as markets proved choppy through further geopolitical escalations, higher energy prices, and ahead of GOOGL earnings. US data and Fedspeak again took the backseat given the lack of data and the Fed being on blackout, keeping the Middle East conflict as the main focus.
• EUR mildly gained but with upside capped amid quiet newsflow from the bloc and with participants awaiting the ECB meeting on Thursday, where the central bank is expected to stand pat, but could provide hawkish hints for a September rate increase.
• GBP was ultimately flat following a muted reaction to the mixed UK inflation report, which suggests the BoE keep rates unchanged through year-end, as headline Y/Y cooled at a faster rate than expected.
• JPY saw a bout of strength following reports that the BoJ is said to be open to a hike faster than every six months, a more hawkish view than the general analyst consensus that the BoJ would stick with its usual six-month hiking pace, although most of the intraday move was pared.

FIXED INCOME

• T-notes settled lower with the Treasury curve continuing to bear flatten as escalating geopolitical tensions pushed oil prices higher, reinforcing expectations for further Fed tightening.

COMMODITIES

• Oil prices gained as US/Iran tensions continue to show no sign of de-escalation, with US President Trump posting that "From this point forward, any time Iran shoots at a ship in the Strait of Hormuz... US will bomb and destroy ONE BRIDGE OR POWER PLANT". In response to this, an Iranian military source stated, "if any bridge or power plant is targeted... we will hit several infrastructures and energy facilities in the region". In addition, disruptions around Bab el-Mandeb and rising shipping costs also underpin oil prices, and Iran's top negotiator Ghalibaf warned that "In a region where we do not sell oil, no one will sell oil."
• US EIA Crude Oil Stocks (Jul. 17) +2.011M vs. Exp. -1.250M (Prev. -1.693M)
• Shipping insider said "nothing is going through" the Strait of Hormuz, despite the US insisting it's open, according to CBS.
• Qatar Energy is reportedly preparing to extend LNG force majeure into October.

GEOPOLITICAL

RUSSIA-UKRAINE

• Ukrainian President Zelensky spoke with US President Trump's envoys Witkoff and Kushner, while they discussed ideas for resuming diplomatic efforts to end the war, according to Axios sources.
• EU diplomat said ambassadors failed to agree on the 21st package of sanctions on Russia.

OTHER

• US Secretary of State Rubio said he disagreed with China's activities regarding Taiwan and added that US arms sales to Taiwan remained under review.
• US President Trump’s admin is weighing military action in Mali against the al-Qaeda-affiliated group JNIM, according to The Washington Post citing officials.

ASIA-PAC

NOTABLE HEADLINES

• China reportedly instructed all market participants not to rediscount bills below an interest rate of 0.5%, according to sources.
• Chinese Foreign Minister Wang Yi said the US should respect China's core interests and described recent talks as "constructive and positive", while he added that both sides had agreed to prepare for the next stage of high-level exchanges.
• China's Ministry of Commerce said France's recently enacted "anti-ultra-fast fashion" law imposed discriminatory restrictions on Chinese-funded cross-border e-commerce platforms, while it expressed serious concern and said China would monitor developments and take necessary retaliatory measures.
• BoJ officials viewed the recent weakness in the yen as an upside risk to inflation, according to Bloomberg sources. The report said the BoJ was widely expected to leave rates unchanged in July following its June hike and was approaching a stage where inflation expectations were becoming anchored. Furthermore, officials were reportedly open to raising rates more frequently than every six months, while some believed it was important to scrutinise upside inflation risks and saw evidence that companies were passing higher costs on to consumers more quickly than in the past.

EU/UK

NOTABLE HEADLINES

• UK PM Burnham said tax decisions would be taken at the Budget when asked about potential tax increases. He added the tax-free personal allowance would not be changed through unfunded commitments and would instead be reviewed as part of the Budget. Burnham was also reportedly set to unveil plans to tackle youth unemployment next week.

DATA RECAP

• UK Chancellor Healey said fiscal discipline was the government's first priority.
• UK CPI (Jun) Y/Y 2.6% vs. Exp. 2.7% (Prev. 2.8%); Services 3.6% (Prev. 3.7%)
• UK Core CPI (Jun) Y/Y 2.6% vs. Exp. 2.5% (Prev. 2.6%)