Market Wrap US-Europe 3 August: Nasdaq Jumps 2.1 Percent as Oil Sinks on OPEC+

By The Edge Research Team

US stocks rallied on Monday, with technology shares again leading, even as crude oil tumbled on the OPEC+ decision to raise September output, while Europe closed mostly higher. The Nasdaq Composite jumped 2.13 percent, the S&P 500 rose 1.48 percent and the Dow Jones Industrial Average added 1.32 percent, per CNBC, as a slide in oil and lower Treasury yields supported equities. Brent crude fell almost 5 percent.

Wall Street built on last week’s rebound. The Nasdaq Composite climbed 2.13 percent to 25,913.90, the S&P 500 rose 1.48 percent to 7,600.50 and the Dow Jones Industrial Average gained 1.32 percent to 53,178.41, per CNBC, with technology and growth shares leading while energy names lagged on the drop in crude. The volatility index eased 0.81 percent to 15.86, holding near its lowest levels of recent weeks.

Europe closed mostly higher. Germany’s DAX rose 1.45 percent to 26,001.31, France’s CAC 40 added 1.22 percent to 8,613.82 and the Euro Stoxx 50 gained 1.08 percent to 6,426.50, per CNBC. Britain’s FTSE 100 was the exception, easing 0.10 percent to 10,857.70 as its energy-heavy composition weighed.

In commodities, oil sank while gold held steady. Brent crude fell 4.70 percent to 83.80 dollars a barrel and West Texas Intermediate 5.44 percent to 80.06 dollars, per CNBC, after OPEC+ agreed at the weekend to raise production for September, a step the market read as adding barrels into a softening demand outlook. Gold was little changed, up 0.09 percent to 4,110.90 dollars an ounce, as Treasury yields fell.

In currencies and crypto, the dollar was broadly steady. The euro held at 1.1509 and sterling eased 0.02 percent to 1.3425, while the yen was little changed at 157.18 per dollar, per CNBC. The US 10-year Treasury yield fell about 7 basis points to 4.676 percent, a tailwind for equities. The Egyptian pound firmed to 50.07 per dollar, extending its move below the 51 line, while Bitcoin rose 0.44 percent to about 63,606 dollars.

Further east, Monday’s closes from our MENA-Asia wrap showed Gulf equities decoupling from the oil drop: Dubai’s DFM General Index rose 1.42 percent, Saudi Arabia’s Tadawul 1.10 percent and Qatar’s QE Index 0.83 percent, with Bahrain the only Gulf benchmark to decline while Egypt and Jordan also finished lower. Across Asia the session was mixed, with South Korea’s Kospi down 5.12 percent after Friday’s record surge, even as India’s Nifty 50 rose 1.60 percent, per CNBC and the regional exchanges.

Why it matters: The rally in US and European equities alongside a sharp fall in oil is a broadly supportive mix for the Gulf, our reading. Lower crude trims the near-term export revenue of producers such as Saudi Arabia, Kuwait, the UAE and Oman, but the drop came with lower Treasury yields and firmer global risk appetite, an environment that eases financing costs for the dollar-linked Gulf economies and supports regional assets, which had already held firm on Monday. For energy importers such as Egypt and Jordan, cheaper oil is a direct relief, reinforcing the recent strength in the Egyptian pound.

Outlook: The immediate markers are whether oil stabilises after the OPEC+ increase or extends its slide, the path of Treasury yields, and the run of US data into Friday’s July jobs report, our reading. A deeper drop in oil would pressure energy shares and Gulf producer revenue even as it aids importers, while continued gains in technology would confirm the recovery in risk appetite as the Gulf trades the same backdrop through the week.

Table US equities, 3 August close, ranked by change:

Table Europe equities, 3 August close, ranked by change:

Table MENA and Asia, 3 August closes, for reference, ranked by change:

Table Commodities, intraday 3 August, ranked by change:

Table Currencies, rates, volatility and crypto, intraday 3 August, ranked by percent change:

Sources: CNBC; Reuters.

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