Daily Summary: Wall Street Regains Ground; Another Intervention in the Yen Market
Date: July 31, 2026
Market Overview
The stock market experienced significant volatility today, primarily driven by a sharp rise in US Treasury yields. The yield on 30-year bonds reached its highest level since 2007 at approximately 5.26%, while the benchmark yield on 10-year bonds exceeded 4.7%, marking its highest level since January 2025. Investor confidence in the new Federal Reserve Chair, Kevin Warsh, has waned despite his assurances regarding inflation control.
Geopolitical Developments
On the geopolitical front, tensions escalated as the Iranian army reported attacks on US military bases in Kuwait and Bahrain, in retaliation for recent US strikes against Iran. Additionally, Iran targeted oil tankers in the Strait of Hormuz, a critical global trade route, which temporarily increased energy prices due to supply disruption fears. However, reports indicated that oil flows through the Strait were resuming, alleviating some supply concerns.
Macroeconomic Data
Mixed macroeconomic data released on Friday highlighted ongoing inflationary pressures in the US. The labour cost index for Q2 rose by 0.9%, surpassing the forecast of 0.8%, raising concerns about persistent wage pressures. Conversely, consumer sentiment improved to 55.2, exceeding expectations of 54.0, while annual inflation expectations fell to 4.2%, the lowest since March. In the eurozone, inflation rose to 2.9% in July, with significant disparities among member states.
Stock Market Performance
Despite earlier fluctuations, major US stock indices closed in positive territory. The Nasdaq Composite rose by 0.6%, the S&P 500 increased by 0.4%, and the Dow Jones gained 228 points (0.5%). The iShares Semiconductor ETF surged by 5.4%, following a substantial 8.5% rise on Thursday after Microsoft’s strong earnings report.
Contrasting reactions were observed in the tech sector: Apple’s shares fell over 9% despite exceeding revenue forecasts due to a 22% increase in iPhone sales, as service revenue and future outlook disappointed investors. In contrast, Amazon’s stock rose by 11% on better-than-expected revenue, driven by its cloud segment's performance.
Other notable stock movements included a 10% drop in Novo Nordisk after a failed clinical trial, a 133% surge in Replimune following positive FDA feedback, and solid results from Chevron and Exxon Mobil, buoyed by high oil prices amid geopolitical tensions.
Foreign Exchange Market
The dollar remained stable, with the USDIDX index slipping slightly by 0.03%. The Japanese yen fell by 0.49% against the dollar, with analysts noting a low five-year Z-score for USDJPY, which, combined with potential US Treasury intervention, could lead to a significant exchange rate reversal. The zloty showed slight gains against both the euro and the dollar.
Commodities Market
The energy commodities market saw a resurgence, with WTI crude oil gaining 1.10% and Brent crude rising by 0.92%, following a nearly 25% monthly increase in oil prices. European natural gas prices surged over 33% in July due to supply concerns ahead of the heating season. In contrast, gold and silver prices fell by 1.32% and 2.15%, respectively, under pressure from hawkish Fed data, while cocoa rebounded by over 6% due to supply issues in West Africa.
Cryptocurrency Market
Bitcoin experienced a decline of 2.77%, reflecting a broader decrease in risk appetite linked to rising bond yields and a hawkish Federal Open Market Committee stance, impacting valuations of speculative assets.
Conclusion
The market remains sensitive to both macroeconomic indicators and geopolitical developments, with investors closely monitoring the implications of rising yields and inflationary pressures on future market performance.