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Morning Bid U.S.

A Reuters Open Interest newsletter

What matters in U.S. and global markets today

By Anna Szymanski, Editor-in-Charge, Reuters Open Interest

Markets began the week on a mixed note, with Asian shares easing and Wall Street futures ticking up before the bell on Monday ahead of the first wave of second-quarter earnings reports this week.

Investors returning from the U.S. July 4 holiday and 250th anniversary celebrations will be digesting those earnings alongside a softer-than-expected U.S. jobs report last week, which prompted markets to scale back rate-hike bets and helped propel global stocks higher on the week.

I'll get into that and more below.

But first, listen to the latest episode of the Morning Bid daily podcast, where we discuss the longer-term implications of the OPEC+ move and preview the week ahead.

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Today's Market Minute

Samsung Electronics is likely to estimate that its operating profit jumped about 18-fold to another record high from a year earlier in the second quarter, as AI growth continues to strain memory supply and push chip prices ‌higher.
South Korean chipmaker SK Hynix will launch a U.S. listing on Monday to raise about $28 billion, according to regulatory filings, as it capitalises on the global AI boom with one of the world's largest new share sales.
OPEC+ has agreed a further increase in output targets from August, the group said in a statement on Sunday, ‌adding to global supply at a time when oil prices are falling due to the gradual reopening of the Strait of Hormuz for oil exports.
The latest OPEC+ production quota boost raises two questions: can they actually ship the increased output and if they can, who will buy it? Read the latest analysis by ROI Asia Commodities Columnist Clyde Russell.
Legislation signed by U.S. President Donald Trump to phase out federal tax credits for wind and solar projects risks raising electricity prices, weakening power supply reliability and making it harder to meet a surge in demand, argues ROI Energy Transition Columnist Gavin Maguire.

From payrolls to profits

Tech stocks and the health of the AI boom will remain top of mind for investors this week as trading gets back to normal after the U.S. holiday. Chip stocks, which soared in the first half of the year even as the so-called Magnificent Seven lagged, were swept up in last week's tech selloff and could face a further test this week.

The chip-heavy KOSPI index eased 0.5% on Monday ahead of Samsung Electronics' earnings on Tuesday. The South Korean tech giant is expected to post an 18-fold jump in profit on soaring demand for AI memory, though enormous bonus payouts could weigh on earnings.

Meanwhile, rival chipmaker SK Hynix is preparing to launch its U.S. listing on Monday with a view to raising $28 billion, with its shares set to start trading on the Nasdaq on Friday. Also in tech news, Elon Musk's SpaceX is set to join the Nasdaq on Tuesday.

The earnings season will kick off this week, with S&P 500 companies expected to deliver robust growth of more than 24% in the second quarter. Among the first major companies to report stateside later in the week will be Delta Air Lines and PepsiCo, both of which could shed light on the health of the U.S. consumer.

That will be particularly important given last week's dominant market story: the downside surprise of the U.S. June jobs report. It showed nonfarm payrolls rose by just 57,000, well short of expectations for a 110,000 increase. April and May payroll figures were also revised down by a combined 74,000.

The soft print led investors to dial back expectations for Federal Reserve tightening as soon as September and helped lift some U.S. equities on Thursday, though a tech selloff continued to weigh on the Nasdaq. Global shares went on to post their best weekly performance in two months, with MSCI's broadest index of world shares climbing some 2%.

Minutes from the Fed's hawkish June meeting, due out this Wednesday, could offer more clues on policymakers' thinking, though these comments will largely predate the recent ramp-up in oil flows through the Strait of Hormuz.

On that front, oil prices slid further to under $72 a barrel on Monday morning. Prices were little changed last week as concerns about supply continued to fade amid returning flows through Hormuz, and that picture has been helped by the latest production quota boost by OPEC+, announced on Sunday.

Whether that production increase is realized, however, will depend on the continued ability of tankers to transit the strait - and that hinges on ongoing talks between the U.S. and Iran on a permanent peace deal.

Meanwhile, the buoyant U.S. dollar has lost some momentum since last week's jobs report, but edged up again early on Monday. Gold, which benefits from a lower-rate environment, recouped some of its recent losses last week, but has eased a touch today on the stronger dollar.

Staying in FX, traders remained on intervention watch as the Japanese yen weakened once more toward 40-year lows past 162 per dollar on Monday.

Finally, Turkey will host the NATO summit on Tuesday and Wednesday, with President Trump set to meet with Ukrainian President Volodymyr Zelenskiy in a renewed push to end the nearly 4-1/2-year-old conflict.

Ukrainian drone attacks continue to cause significant damage to Russia's refining infrastructure, forcing the world's third-largest oil producer to import gasoline. Moscow has also now staged deadly attacks on the Ukrainian capital of Kyiv twice in less than a week.