US-Iran Tensions Escalate as Q2 Earnings Season Begins

US-Iran tensions around the Strait of Hormuz escalated this week as Iran demanded all vessels use the northern corridor under its supervision, while commercial traffic continues through the southern corridor protected by the US Navy. The conflict emerged as a trigger for renewed strikes between the countries. Market focus this week centers on Tuesday's June inflation data, the US Q2 earnings season beginning with JPMorgan and Goldman Sachs, and economic data releases across the US, eurozone, and Asia.

Iran Demands Northern Corridor Supervision at Strait of Hormuz

Iran's demand that all vessels use the northern corridor of the Strait of Hormuz under its supervision triggered the return to exchanging strikes between the US and Iran. Most commercial traffic continues to move through the southern corridor along Oman's coast, protected by the US Navy. Treasury yields spiked last week amid the escalating tensions.

US Q2 Earnings Season Begins with JPMorgan and Goldman Sachs

The US Q2 earnings season kicks off this week with JPMorgan and Goldman Sachs leading the way, followed by Netflix, BlackRock, and Johnson & Johnson. S&P 500 earnings are expected to grow 23.6% year-on-year, marking the second consecutive quarter of gains above 20%.

Global Economic Data Releases Scheduled Across US, Eurozone, and Asia

In the US, pending home sales for June are due on Thursday, followed by housing starts on Friday. In the eurozone, May industrial production comes out on Wednesday, foreign trade data on Thursday, and the ECB's balance of payments figures on Friday. In Asia, Japan will release May machinery orders on Wednesday and the Bank of Japan's consumer confidence survey on Thursday. In China, Q2 GDP and June activity data will be released, with growth expected at 4.5% year-on-year, down from 5.0% in Q1. The Bank of Canada will announce its rate decision on Wednesday, with a 91% probability of rates remaining unchanged at 2.25%. In the UK, Andrew Bailey and Rachel Reeves will speak at the Mansion House dinner in London on Tuesday.

FAQ

What triggered the escalation between the US and Iran at the Strait of Hormuz?

Iran's demand that all vessels use the northern corridor of the Strait of Hormuz under its supervision triggered the escalation, while most commercial traffic continues through the southern corridor along Oman's coast, protected by the US Navy.

What is the expected growth rate for S&P 500 earnings in Q2?

S&P 500 earnings are expected to grow 23.6% year-on-year in Q2, marking the second consecutive quarter of gains above 20%. The earnings season begins this week with reports from JPMorgan and Goldman Sachs.