MPC Markets Morning Call — 4th August 2026: Dow Hits Record as Oil Slides on Iran Peace Hopes
Wall Street kicked off August with a strong rally as oil prices tumbled more than 5% after President Trump called off a planned attack on Iran and cited renewed peace negotiations. The Dow posted its first record close since July 6, climbing 1.3% to 53,178. Tech stocks led the charge with the Nasdaq surging 2.1%, while Amazon topped $3 trillion in market capitalisation for the first time. ASX futures are flat heading into Tuesday’s open as investors weigh the US rebound against a muted Asia session.
US equities rallied sharply on Monday as a slide in oil prices and solid manufacturing data lifted sentiment to start August. The S&P 500 gained 1.5% to 7,601.41, the Nasdaq Composite surged 2.1% to 25,913.90, and the Dow Jones Industrial Average climbed 1.3% to 53,178.41 — its first record close in nearly a month. Brent crude fell 4.8% to $83.75 per barrel after Trump called off a planned military strike on Iran and signalled renewed diplomatic efforts, though Tehran publicly denied any negotiations were underway. The yen held steady around ¥157.40 per dollar after Japan’s estimated $34 billion FX intervention on Friday, bringing total spending to roughly $100 billion over the past week. US manufacturing activity expanded in July at its fastest pace in more than four years, reinforcing the economic resilience narrative. S&P/ASX 200 futures were unchanged heading into Tuesday, with the Australian dollar at US$0.7000.
The S&P 500 rose 1.5% to 7,601.41, the Nasdaq surged 2.1% to 25,913.90, and the Dow climbed 1.3% to a record close of 53,178.41 — its first since July 6.
Trump called off a planned attack on Iran and cited peace talks as the reason, calling the negotiations Tehran’s “last chance” before “decapitation,” though Iran denied any direct US dialogue.
Brent crude fell 4.8% to $83.75 and WTI dropped 5.3% to $80.16 a barrel on hopes of a diplomatic breakthrough over the Strait of Hormuz, now in its sixth month of near-total closure.
Japan spent an estimated $34 billion on FX intervention Friday alone — bringing the week’s total to roughly $100 billion — as officials and the US Treasury coordinate to defend the yen.
Palantir raised full-year revenue guidance to $8.15–$8.16 billion after Q2 revenue surged 93% to $1.94 billion, while Amazon breached $3 trillion market capitalisation and Boeing gained FAA certification for the 737 MAX-7.
S&P/ASX 200 futures were unchanged with the AUD at US$0.7000; the week ahead features JOLTS job openings today, nonfarm payrolls on Friday, and SpaceX’s first-ever public earnings report.
Wall Street Storms Back as Dow Posts Record Close
US stocks rallied strongly on Monday, kicking off August with broad-based gains after a volatile July that ended with the Nasdaq down more than 3% and the S&P 500 off 0.1%. The S&P 500 added 1.5% to close at 7,601.41 — within 0.5% of its all-time high — while the Nasdaq Composite surged 2.1% to 25,913.90 and the Dow Jones Industrial Average climbed 1.3% to 53,178.41, posting its first record close since July 6.
Eight of eleven S&P 500 sectors finished higher, led by communications services (+4%) and consumer discretionaries (+2.7%). Amazon topped $3 trillion in market capitalisation for the first time after its blowout Q2 report showed AWS revenue up 36.7% year-over-year. Oracle surged 9%, Boeing jumped 8% on the 737 MAX-7 FAA certification, while Microsoft and Alphabet both gained around 5%. Apple was a conspicuous underperformer, falling 1.8%. After the close, Palantir raised its full-year revenue guidance to $8.15–$8.16 billion after Q2 revenue surged 93% to $1.94 billion, sending shares up 9% in extended trading.
The earnings picture is fuelling renewed optimism. Of the 307 S&P 500 companies that have reported Q2 results, 86% have beaten EPS forecasts, and the LSEG I/B/E/S consensus annual US earnings growth forecast is running at an astonishing 47.7% — virtually double what it was a month ago. “Earnings will remain the primary focus, with roughly 15% of the S&P 500 by market capitalisation scheduled to report,” said Matt Orton, chief market strategist at Raymond James Investment Management.
Trump Calls Talks Iran’s “Last Chance” After Cancelling Strike
The dominant geopolitical driver of Monday’s session was the dramatic de-escalation — and subsequent re-escalation of rhetoric — between the US and Iran. President Trump confirmed over the weekend that he had called off “a massive attack” on the Islamic Republic at the request of Saudi Arabia, the UAE, Qatar, and Iran itself, claiming they believe there is a deal to be made on the Strait of Hormuz and ultimately on Iranian denuclearisation.
“I want to give them every last chance before decapitation,” Trump told reporters in the Oval Office. “You’ll find out today or tomorrow. I mean, they’re going to go quickly, one way or the other. It’s not very complex.” However, Iran publicly denied any direct negotiations with Washington. Foreign ministry spokesperson Esmaeil Baqaei said Tehran was “not currently negotiating with the United States” and was instead working with Oman on a temporary shipping route through the strait.
The conflicting signals underscore the fragility of the diplomatic situation. Trump responded angrily, calling Iran’s leadership “unbelievably duplicitous” and insisting that talks were in fact taking place. Late Monday, a senior Iranian official called on the US to “take the first step and change its behaviour” by returning to the terms of a June agreement, warning that “US warships and bases will be in serious danger” if the blockade is not lifted. The Strait of Hormuz remains effectively closed — hardly any ships are transiting with transponders on — and has not carried its pre-conflict share of roughly a fifth of global oil supply for months.
“Despite sliding oil prices, Wall Street’s latest rally, and strong AI infrastructure investment, the U.S. economy is still surrounded by risks — which could seep into the stock market. The U.S.-Iran war is now entering its sixth month, the average price for a gallon of gasoline is back above $4, and inflation remains a thorn in every American’s side,” said Yerbol Orynbayev, former World Bank governor of Kazakhstan.
“Certainly, the news of renewed peace talks in the Middle East is always positive, but the question is whether it will last. Until peace talks are accompanied by the reopening of the Strait of Hormuz, energy-driven pressures will continue to squeeze the market, driving uncertainty and keeping investors on the back foot.”
Oil Slides as Peace Hopes Collide with Strait of Hormuz Reality
Crude oil posted its sharpest single-session decline in weeks on Monday. Brent futures fell 4.8% to $83.75 a barrel while WTI dropped 5.3% to $80.16, driven by Trump’s decision to call off a military strike and his claims of renewed negotiations. However, the on-again, off-again nature of US–Iran diplomacy means the Strait of Hormuz — the chokepoint that carried about a fifth of global oil supply before the conflict — remains all but shut. Most vessels that do transit are hugging Iran’s coast with Iranian permission or taking a southern route near Omani waters.
The broader commodity complex was more settled. Spot gold was little changed at $4,054.33 an ounce, hovering above the psychologically significant $4,000 level. Copper gained 1.1% on the day with a strong 3.2% five-day rally. Uranium equities continued their run, with the URA ETF up 4.5% daily and 4.8% over five days, reflecting sustained demand from global energy security and AI power generation themes.
In currencies, the Bloomberg Dollar Spot Index was little changed. The Australian dollar held at US$0.7000, while the euro was steady at $1.1510. US Treasury yields fell 4–7 basis points across the curve on the oil slide, with the 2-year JGB yield at 1.56% — its highest in 31 years — and the 5-year JGB yield at 2.09%, its highest in 30 years. Bitcoin slipped 0.5% to $63,418.
Japan Spends $100 Billion in a Week Defending the Yen
Japan’s currency intervention campaign escalated dramatically last week, with Finance Minister Satsuki Katayama confirming the country stepped into the FX market on Friday. A Bloomberg analysis of BOJ current-account data estimates Friday’s operation at approximately ¥5.33 trillion ($34 billion), building on Thursday’s estimated ¥8.45 trillion — what would be the largest single-day intervention on record. Together, the two days represent roughly $100 billion in yen-buying, a historic commitment to defending the currency.
The US Treasury joined the effort last week in the closest coordination on currency policy in 15 years. Treasury Secretary Scott Bessent said Washington “wouldn’t hesitate” to step into the market again, while Trump described the intervention as “a signal of friendship.” The yen traded around ¥157.40 per dollar early Tuesday, well off the 40-year low near ¥164 hit before the intervention. Japan has now spent an estimated $310 billion on FX intervention over the past four years.
US manufacturing activity expanded in July at its fastest pace in more than four years as demand remained strong, production surged, and firms added workers. The global picture is similarly encouraging: euro zone output hit a four-and-a-half year high, and Japan’s manufacturing PMI leaped to a 12-year high. The AI capex boom is helping keep the world’s manufacturers busy, though weak spots remain in China, India, and the UK.
“The U.S. economy is still in a vulnerable period. Right now, wages are barely keeping pace with inflation, and interest rates are similarly high. With stagflationary concerns rife, households may turn to saving instead of spending, which will only cause the U.S.’s economic growth to slow further,” said Yerbol Orynbayev, former World Bank governor of Kazakhstan.
“This leaves the Federal Reserve at a crossroads. In the last FOMC meeting, the Fed left rates unchanged, but a drop in household spending alongside the other ongoing market pressures might be the final push for Governors to join their dissenting peers and vote to hike rates.”
ASX Outlook & the Day Ahead
S&P/ASX 200 futures were unchanged heading into Tuesday’s session, suggesting a flat open despite Wall Street’s strong performance. The Australian dollar held at US$0.7000. The ASX gained 0.5% on Monday with a strong 0.8% five-day return, supported by broad global risk-on sentiment and commodity tailwinds. Iron ore was little changed on the day but down 5.7% over five sessions, reflecting ongoing softness in Chinese demand, while coal slipped 1.1% daily.
Australian investors return to a busy global calendar on Tuesday. The RBA remains in a holding pattern on rates, but the focus this week is squarely on US labour market data culminating in Friday’s July nonfarm payrolls report, which will be key for Fed rate expectations.
- ASX Open — Futures point to a flat open around 8,350. Watch for follow-through from Wall Street’s tech rebound, particularly in local AI and semiconductor exposures.
- South Korea CPI (July) — Early Asian data release; implications for regional inflation trends and central bank policy divergence.
- US JOLTS Job Openings (July) — 12:00am AEST Wednesday — First in a series of labour market readings this week. A strong number could reinforce the Fed’s hawkish hold.
- US Earnings: SpaceX, AMD, Caterpillar, McDonald’s — SpaceX reports its first-ever public quarterly earnings. AMD results will be closely watched for AI chip demand signals.
- US Trade Balance (June) — Trade data arrives amid ongoing Strait of Hormuz disruptions and shifting energy supply routes.
