Market Wrap US-Europe 4 August: Nasdaq Surges 2.6 Percent as Oil Slides Again

By The Edge Research Team

US stocks surged on Tuesday, with technology leading a broad advance, even as crude oil fell more than 5 percent for a second consecutive session, while Europe closed higher. The Nasdaq Composite jumped 2.59 percent, the S&P 500 rose 1.79 percent and the Dow Jones Industrial Average added 1.71 percent, per CNBC, as falling Treasury yields and cheaper oil supported the rally. Brent crude settled below 80 dollars.

Wall Street extended Monday’s gains with a stronger session. The Nasdaq Composite climbed 2.59 percent to 26,584.99, the S&P 500 rose 1.79 percent to 7,736.52 and the Dow Jones Industrial Average gained 1.71 percent to 54,085.88, per CNBC, with technology and growth shares again in front while energy lagged on the slide in crude. The volatility index rose 3.40 percent to 16.40 even as stocks advanced, a sign hedging demand is running beneath the rally.

Europe closed higher across the board. The Euro Stoxx 50 gained 0.94 percent to 6,486.70, Germany’s DAX rose 0.77 percent to 26,202.35 and France’s CAC 40 added 0.61 percent to 8,666.63, per CNBC, while Britain’s FTSE 100 edged up 0.20 percent to 10,879.38.

In commodities, oil extended its slide while gold firmed. Brent crude settled 5.29 percent lower at 79.34 dollars a barrel and West Texas Intermediate fell 5.71 percent to 75.75 dollars, per CNBC, leaving Brent down roughly 10 percent over two sessions since the OPEC+ decision to raise September output. Gold rose 1.06 percent to 4,133.80 dollars an ounce as Treasury yields fell across the curve.

In currencies and crypto, the dollar was mixed. The euro firmed to 1.1531 and sterling to 1.3450, while the yen eased to 157.75 per dollar, per CNBC. The US 10-year Treasury yield fell about 7 basis points to 4.621 percent, extending its decline. The Egyptian pound held near 50.13 per dollar, while Bitcoin rose 0.39 percent to about 64,135 dollars.

Further east, Tuesday’s closes from our MENA-Asia wrap showed a mixed Gulf session led by the United Arab Emirates, with Dubai’s DFM General Index up 1.83 percent and Abu Dhabi’s FADGI up 1.62 percent while Saudi Arabia also firmed, and South Korea’s Kosdaq rebounded 5.88 percent and China’s Shenzhen Component gained 3.25 percent after Monday’s technology selloff, per CNBC and the regional exchanges.

Why it matters: A second day of equities rallying through an oil crash reinforces the supportive mix for the Gulf, our reading. Brent below 80 dollars trims the near-term export revenue outlook for Saudi Arabia, Kuwait, the UAE and Oman, but the drop has come with falling Treasury yields and strengthening global risk appetite, an environment that lowers financing costs for the dollar-linked Gulf economies and had already lifted the UAE and Saudi Arabia on Tuesday. For energy importers such as Egypt and Jordan, crude near three-week lows is a direct relief, and the surge in precious metals lifts the value of regional central banks’ gold holdings.

Outlook: The immediate markers are whether oil finds a floor after a two-session drop of roughly 10 percent, the path of Treasury yields, and the run of US data into Friday’s July jobs report, our reading. A stabilisation in crude would ease the pressure on energy shares and Gulf producer revenue, while continued strength in technology would confirm the recovery in risk appetite as the Gulf trades the same backdrop through the week. The rise in the volatility index alongside the rally suggests investors are keeping hedges on into the jobs report.

Table US equities, 4 August close, ranked by change:

Table Europe equities, 4 August close, ranked by change:

Table MENA and Asia, 4 August closes, for reference, ranked by change:

Table Commodities, 4 August, ranked by change:

Table Currencies, rates, volatility and crypto, 4 August, ranked by percent change:

Sources: CNBC; Reuters.

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