MPC Markets Morning Call — 9th July 2026: War On, Risk Off: Stocks Drop as Trump Calls Iran Peace Deal “Over”

Wall Street scraped through Wednesday with a mixed finish after a volatile session dominated by the U.S.–Iran escalation. The S&P 500 fell 0.3% to close at 7,481.46 — almost 400 of its constituents ended in the red, though late buying trimmed what had been a much steeper slide. The Dow bore the brunt, dropping 1.1% to 52,348.09 as materials and financials dragged. The Nasdaq managed a 0.2% gain to 25,870.65, clawing back from a 1.1% intraday deficit.

The Philadelphia Semiconductor Index rose more than 2%, snapping a four-session rout that had cost the sector nearly 14%. Nvidia led the charge, climbing 3.7% to $204.12 after reports that China would allow its top AI firms to purchase a limited number of H200 chips. Technology and Energy were the only two of eleven S&P sectors to finish green, the latter riding the oil spike. Everything else sold off.

Across the Atlantic, the damage was worse. Europe’s STOXX 600 posted its heaviest single-day loss since March, with no AI rebound to cushion the blow. The MSCI World Index fell 0.6%. Earnings season kicks off this week with Levi Strauss, PepsiCo and Delta Air Lines headlining — expect guidance commentary to be filtered through the lens of renewed energy-cost uncertainty.

Global indices performance — 8 July 2026. Broad-based selling across European and Asian benchmarks; Nasdaq the lone major gainer.

The interim peace deal signed between the U.S. and Iran last month — which had reopened the Strait of Hormuz, halted fighting on all fronts and lifted sanctions on Iranian oil sales — is coming apart at the seams. Following attacks on three oil tankers in and around the Strait, U.S. Central Command struck more than 80 targets inside Iran on Tuesday, hitting air defence systems, command and control networks, coastal radar sites, anti-ship missile capabilities and more than 60 IRGC small boats. Iran responded by targeting 85 military installations in Kuwait and Bahrain and shooting down an American drone.

At the NATO summit in Ankara, Trump ramped up the rhetoric. He told reporters the ceasefire was “over” and that the U.S. would “probably hit them hard again tonight.” He floated reimposing the naval blockade on Iran’s ports, said the U.S. had struck Kharg Island — Iran’s key oil export terminal — and mused about seizing it entirely. He also warned that bridges, desalination plants and power infrastructure could be next. The U.S. revoked the general licence that had permitted Iranian oil production and sales.

NATO leaders gathered in Ankara this week. Trump used the summit to vent frustration at Iran, float Greenland claims and criticise Spain — Source: Bloomberg

Iran’s parliament speaker Mohammad Bagher Ghalibaf accused Washington of violating the deal. State media reported that Tehran would shut the Strait of Hormuz in response to further U.S. attacks and refuse to permit any new transit routes through the waterway. Sentiment lifted slightly when Trump, at a later press conference, said he didn’t think the war would actually restart — oil pared some gains on those remarks. The latest violence casts doubt over negotiations, which are already on hold while Iran conducts a weeklong mass funeral for the late Supreme Leader Ali Khamenei.

Elsewhere at the summit, Trump indicated he was ready to lift defence-industry sanctions preventing Turkey from buying F-35s — a boost for Erdogan. His meeting with Zelenskyy went well, with Trump congratulating Ukraine on an “amazing job” and announcing the U.S. would allow Ukraine to manufacture Patriot air defence missiles. He also attacked Spain’s Pedro Sánchez, calling the country “hopeless” and “bad,” and once again lamented the return of Greenland to Denmark after World War II.

Bond yields jumped sharply as traders repriced rate-hike expectations — Germany and UK 2-year yields both up 10bp to their highest in a month.

Oil dominated the session. Brent crude surged as much as 8% intraday to briefly top $80 a barrel — its highest since June 22 — before settling up 5.9% at $78.55. WTI climbed 5.4% to $74.25 a barrel. The spike came as Trump declared the ceasefire “over,” the U.S. revoked the general licence for Iranian oil sales, and Tehran threatened to shut the Strait of Hormuz. Prices pared gains only after Trump later hedged, saying he didn’t think the war would resume.

Brent crude briefly topped $80 as Iran tensions resurfaced — the sharpest one-day spike since the original conflict erupted.

Away from the geopolitics, U.S. crude inventories offered a rare counterpoint. The EIA reported a 3-million-barrel build in commercial stockpiles — the first after ten consecutive weeks of draws, and against expectations for a 2.4-million-barrel draw. Total commercial inventories remain at eight-year lows. Including the SPR, total stockpiles fell to 730.8 million barrels — the lowest since May 1984. Separately, U.S. crude and petroleum product exports hit a record 13.6 million barrels per day in April, up 15% from March.

Gold went the wrong way for haven seekers, falling 0.6% to $4,081.35 an ounce — still 23% below pre-war levels. Dollar strength and rising rate-hike expectations continue to crush bullion, which has failed to function as a geopolitical hedge since the Iran conflict began. The euro edged up 0.1% to $1.1427, the pound gained 0.3% to $1.3403, and the yen slipped 0.2% to ¥162.49 per dollar. The 10-year Treasury yield rose 2bp to 4.57%. Bitcoin dropped 2.2% to $62,252.80.

Gold remains 23% below pre-war levels — rate-hike bets and dollar strength have overwhelmed safe-haven demand.

Commodities, energy & FX snapshot — 8 July 2026. Oil the clear outlier; gold and crypto both under pressure.

The minutes from the Fed’s June 16–17 meeting — the first under new chair Kevin Warsh — showed a committee wrestling with competing inflation scenarios. A few participants made the case for raising rates immediately, while the broader group was evenly divided: “most” saw pathways where inflation would cool on its own, and “most” also saw situations where strong AI-related demand, the Middle East conflict or tariff effects would keep it elevated enough to warrant hikes.

The timing is awkward. The June meeting coincided with the signing of the U.S.–Iran peace deal, which sent oil prices tumbling and briefly eased the inflation picture. That relief has now evaporated. With oil back near $80 and the ceasefire in tatters, markets are repricing aggressively — the CME FedWatch tool shows traders now pricing in 36bp of Fed tightening this year, alongside 35bp from the ECB and 32bp from the Bank of England.

Euro zone one-year CPI expectations jumped 14bp to 1.992%. Germany and the UK’s 2-year bond yields both rose 10bp to their highest in a month. The U.S. reaction was more muted — 2-year yields up 5bp — reflecting America’s position as an energy exporter. Still, as veteran strategist Ed Yardeni warned, the ceasefire rupture risks sparking a fresh acceleration in prices that could force the Fed’s hand.

Australian shares are set for a weaker open. ASX 200 futures dropped 49 points, or 0.6%, to 8,706 as the Iran escalation rippled through risk assets. Materials and financials — which paced the losses on Wall Street — are likely to face the most pressure locally. The energy sector could provide a partial offset given the oil spike, but the broader mood is risk-off.

The IMF overnight cut Australia’s 2026 growth forecast to 1.9% as part of a broader downgrade to its global outlook (now 3.0%), citing Middle East and trade risks. Economists flagged the lower growth number as potentially helpful for the RBA’s inflation fight. China’s CPI and PPI data at 11:30am AEST will be closely watched for read-throughs to commodity demand and the deflation narrative.