Morning Bid: The most violent ceasefire

• Oil prices spiked above $90/barrel for the first time since early June before paring gains; U.S. retail gasoline prices have risen over 30% since the conflict began and are now above $4 per gallon
• Shipping traffic through the Strait of Hormuz has drastically slowed amid Iranian attacks on Gulf shipping and U.S. bases, threatening global energy supply chains
• Tech stocks continue their correction with U.S. chip stocks down 10% last week and 20% from June highs, as markets await major earnings from Alphabet, Intel, and Tesla this week

Market Summary: Middle East Conflict Escalates, Oil Surges

Key Developments:

U.S.-Iran hostilities have intensified significantly, with the U.S. conducting strikes on Iranian targets for nine consecutive days. Iranian retaliatory attacks have killed at least three U.S. soldiers and targeted Gulf shipping and U.S. bases. Traffic through the critical Strait of Hormuz has slowed to a trickle.

Energy Markets:

Brent crude briefly surged above $90 per barrel on Monday—the first time since early June—before paring gains after Iran's foreign ministry suggested diplomatic negotiations remain possible. U.S. retail gasoline prices have climbed back above $4 per gallon, up more than 30% since the conflict began.

Equity Markets:

Despite benign June inflation data, markets showed minimal positive reaction due to geopolitical tensions. U.S. chip stocks fell 10% last week and are down 20% from June record highs, signaling potential cooling of AI enthusiasm. South Korea's KOSPI dropped another 3% on Monday.

Monetary Policy:

Futures markets indicate a two-thirds probability the Federal Reserve will raise interest rates by September, reflecting concerns over the energy crisis's inflationary impact.

Upcoming Catalysts:

Major tech earnings reports begin this week, with Alphabet reporting Wednesday, followed by Intel and Tesla. Markets will scrutinize these results amid the recent tech selloff.

Political Developments:

Andy Burnham takes office as UK Prime Minister on Monday. Markets await cabinet appointments, particularly the finance minister selection, with Home Secretary Shabana Mahmood expected to receive the nomination.

Economic Data:

U.S. June Leading Economic Index and Canada's June inflation report due today.