SYDNEY: Asian shares were largely firm on Monday, as Wall Street futures opened the week on hopes of a promising earnings season, while softening oil prices promised relief from inflationary pressures.

While there were no new developments in the US-Iran peace talks, 160 ships have been passing through the Strait of Hormuz from Monday to Saturday last week.

OPEC+ also agreed to further increase its output target to 188,000 barrels a day from August, on top of similar increases for June and July. As a result, Brent fell 0.6% to a four-month low of $71.70 a barrel and US crude fell 0.5% to $68.38. (O/R)

A cooling in energy spending, combined with a soft US payrolls report, led markets to back off the risk of a near-term Federal Reserve rate hike, suggesting a 78% chance of a steady outcome at the July 29 meeting.

Minutes from the Fed’s last meeting are due on Wednesday and should paint a hawkish turn by some board members, although that was before the latest slide in oil.

“Even if you believe there is a risk that the Fed may move too soon, I think we are safe for at least another month,” said Richard Yetsenga, head of research at ANZ.

“Overall our view is still that the Fed will do nothing, but clearly we have been above target on the Fed’s preferred inflation measure for five years,” he added. “There is a risk that the Fed’s patience has run out.”

Additional downside risk this month should allow investors to focus on earnings season, where the AI ​​boom is set to deliver bumper tech profits.

Only Delta Air Lines and PepsiCo are testers this week, though Samsung Electronics is set to make a splash on Tuesday as analysts expect an 18-fold increase in profits.

A profit bonanza for chipmakers
The world’s largest memory chipmaker by sales is likely to flag an operating profit of 86 trillion won ($56.35 billion) for the April to June quarter, according to LSEG SmartEstimate.

South Korea’s red-hot market cooled slightly last week but is still up 92% for the year as AI demand and tight supply drive up chip prices. The index added another 2.25% on Monday, while Japan’s Nikkei fell 0.1%.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4%.

In Europe, EUROSTOXX 50 futures were flat, while DAX futures rose 0.2% and FTSE futures fell 0.2%. S&P 500 futures gained 0.5%, while Nasdaq futures rose 1.4%, on top of last week’s 2.1% gain.

The data calendar begins later Monday with the US ISM services survey where forecasts favor a slight pullback to a steady-healthy 54.0 in June.

A host of central bankers speak at an ECB conference later in the day, including Fed board governor Christopher Waller, while ECB President Christine Lagarde is also due to speak in Paris.

New Zealand’s central bank is due to meet on Wednesday and markets are betting it will raise its 2.25% cash rate by a quarter point, the first increase since mid-2023.

Policymakers have predicted tightening for some time, though again that was before oil prices fell and there should be a chance it would surprise by holding rates steady.

In currency markets, the dollar index held steady at 100.880 following a disappointing June payrolls report. The euro was flat at $1.1445, above a recent 13-month low of $1.1325.

The dollar was held at 161.45 yen, not far from a 40-year peak of 162.84, as speculators remained wary of Japanese intervention.

In commodity markets, gold moved up 2% last week to $4,177 an ounce. (GOL/)