Global stock markets were mixed on Monday following intervention by the U.S. and Japan to support the Japanese yen against the U.S. dollar. Oil prices took a sharp dip after U.S. President Donald Trump announced a halt to attacks on Iran, stating that a deal to end Middle East conflict was imminent. Previously, Trump expressed doubt about negotiations with Iran and suggested military action was forthcoming.
The U.S. dollar fell to about 155.20 yen after intervention by Trump and Japanese officials, in response to its rise to 40-year highs against the yen. By late Monday trading in Tokyo, one dollar exchanged for 156.68 yen. A weaker yen benefits Japanese companies with overseas operations by boosting their profits in yen terms, also attracting foreign tourists due to enhanced purchasing power. Conversely, a weaker yen increases costs for imports such as oil.
The dollar’s strength often attracts investors seeking safety in uncertain times, like during war. Trump praised the strong dollar’s impact but acknowledged a weaker dollar improves U.S. export competitiveness. According to analysts, the U.S. Treasury acted by purchasing yen through the Federal Reserve Bank of New York, signaling support for yen value according to Stephen Innes from SPI Asset Management.
European markets saw Germany’s DAX rise by 1.3% to 25,963.51, with France’s CAC 40 up 1% to 8,596.56. The UK’s FTSE 100 remained stable at 10,861.95. Futures for the S&P 500 and Dow Jones Industrial Average increased by 0.5% and 0.6% respectively.
In Asia, Japan’s Nikkei 225 index fell 0.9% to 63,754.90, and South Korea’s Kospi dropped 5.1% to 6,257.45, having surged 17.9% on Friday for its best day historically, driven by gains in Samsung Electronics and SK Hynix. Both companies saw their shares decline by 8.8% on Monday. Hong Kong’s Hang Seng index rose 0.5% to 26,009.40, while Shanghai Composite lost 0.6% to 3,809.66. Australia’s S&P/ASX 200 gained 0.2% to 8,996.90.
The reduced Middle Eastern conflict led to a 4.7% drop in Brent crude, priced at $83.92 per barrel, while U.S. benchmark crude fell 5.6% to $79.89 per barrel. Amid fluctuating July Wall Street performance, with oil prices affected by the Iran conflict, the S&P 500 saw a 0.7% increase, Dow industrials rose 0.5%, and Nasdaq composite advanced 1%.
Concerns persist over tech investments in artificial intelligence profitability and potentially overvalued chipmaker stocks amid AI excitement. Friday’s gains marked the S&P 500’s first winning week in three, driven by Amazon’s stock surge of 15.3% following its quarterly profit exceeding expectations, particularly in cloud computing growth.