Global Markets Start the Week Cautiously as Dollar, Oil and Iran Remain in Focus

LONDON — 10 August 2026 — By European Business Magazine – Katie Winearls

Global markets began the week on a mixed footing, with Asian and European equities generally firmer but the dollar, oil prices and shifting expectations for US interest rates continuing to dominate investor attention.

Asia-Pacific markets were mostly higher overnight, following strength across US equities at the end of last week. Japan’s Nikkei led gains with a 2.1 per cent rise, while Hong Kong’s Hang Seng added 1.1 per cent. The Shanghai Composite and South Korea’s Kospi both gained 0.7 per cent.

Australia was the exception, with the ASX 200 slipping 0.3 per cent ahead of Tuesday’s Reserve Bank of Australia meeting. The central bank is widely expected to leave its key interest rate unchanged.

European Markets Edge Higher

European equities followed Asia higher, although the FTSE 100 lagged and drifted lower in early trading.

The UK benchmark remains close to record territory after a strong run, with resistance around the 11,000 level and support near 10,800. The index has struggled to extend its gains despite a broader improvement in risk appetite across the continent.

Technology shares were among the stronger performers. Dutch semiconductor equipment group ASML gained around 2.5 per cent, extending its recovery from the sharp losses seen at the end of July. The shares remain below their previous highs following reports that an unnamed Chinese company was developing technology in direct competition with the group.

The wider move reflects a market attempting to balance strong corporate earnings and resilient equity momentum against growing uncertainty over the US economy, monetary policy and the conflict with Iran.

Dollar Tries to Recover After Sharp Sell-Off

The US dollar edged higher on Monday morning, stabilising after a difficult week in which expectations for Federal Reserve policy shifted sharply.

Less than a fortnight ago, the Dollar Index was trading comfortably above 101 and appeared positioned for another move higher. Instead, it fell more than 2 per cent as joint US-Japan intervention to support the yen triggered a broader reversal.

The dollar subsequently steadied before coming under renewed pressure on Friday following a significantly weaker-than-expected US employment report.

Non-Farm Payrolls showed a loss of 23,000 jobs in July, compared with expectations for an increase of 85,000. The labour force participation rate also fell to a five-year low, raising concerns that weakness may be spreading through the US economy.

Investors responded by reducing expectations for further Federal Reserve rate increases this year. That change has removed one of the principal supports for the dollar and shifted attention towards this week’s US inflation data.

Consumer price inflation is due on Wednesday, followed by producer prices on Thursday. Both reports will be closely watched for signs that the Federal Reserve is facing the uncomfortable combination of persistent inflation and a weakening labour market.

Wall Street Holds Near Record Highs

US stock index futures were mixed in early trading, with modest gains for the S&P 500 and Nasdaq offset by slight weakness in the Dow Jones Industrial Average and small-cap Russell 2000.

Semiconductor and artificial intelligence-related stocks remained in demand. Marvell Technology rose 2.4 per cent in pre-market trading, while Intel gained 1.6 per cent. Super Micro Computer added 3.4 per cent ahead of its results on Tuesday.

SpaceX continued its recent recovery, rising another 3.3 per cent after gaining around 20 per cent last week following better-than-expected quarterly results.

The broader US market remains close to record territory. The Dow, S&P 500 and Russell 2000 all reached all-time highs last Wednesday before profit-taking emerged later in the week.

Equities nevertheless ended Friday higher as the weak employment data encouraged investors to price out some of the risk of further aggressive monetary tightening.

The latest CME FedWatch data showed the probability of no further change in interest rates before year-end rising to 23 per cent from 13 per cent previously.

Corporate earnings continue to provide significant support. With 88 per cent of S&P 500 companies having reported, FactSet calculates year-on-year earnings growth of 50.4 per cent. If maintained through the remainder of the season, that would represent the strongest quarterly earnings growth since the second quarter of 2021.

Iran Keeps Oil Market on Edge

Geopolitics remains the other major influence on markets.

Crude oil prices moved higher on Monday after Iran rejected suggestions that it was negotiating directly with the United States over reopening the Strait of Hormuz.

US Treasury Secretary Scott Bessent had suggested last week that an agreement could be close, raising hopes that shipping through the strategically important waterway could begin returning towards normal.

Those expectations faded over the weekend.

Tehran said it was instead holding discussions with Oman over possible shipping corridors and insisted that Washington would have to meet certain conditions before Iran would consider allowing vessels to pass safely through the Strait.

The US Navy continues to block Iranian ports in the region, while President Donald Trump has indicated that economic pressure will remain the primary tool against Tehran rather than an immediate return to large-scale military action.

Iranian-backed Houthi forces in Yemen have meanwhile claimed further attacks on Saudi Arabian energy infrastructure, keeping the geopolitical risk premium firmly embedded in oil markets.

Gold Consolidates After Seven-Week High

Gold reached a seven-week high at the end of last week before giving back some of its early Monday gains.

The metal has benefited significantly from recent dollar weakness, particularly following the US-Japan currency intervention and Friday’s disappointing employment data.

After such a strong move, some consolidation would not be surprising. Much will depend on whether the dollar can recover and whether this week’s inflation figures revive expectations for tighter Federal Reserve policy.

Silver has followed a similar pattern. It briefly moved above $65 an ounce on Friday for the first time since mid-June before pulling back modestly.

For both precious metals, the dollar remains the central variable.

What Markets Are Watching

The new week therefore begins with investors balancing unusually strong corporate earnings against a less reassuring macroeconomic picture.

US equities remain close to record highs, but the labour market has weakened. The dollar has lost momentum, but inflation could still complicate the Federal Reserve’s policy outlook. Oil markets remain hostage to developments around the Strait of Hormuz, while gold and silver are benefiting from uncertainty surrounding both monetary policy and geopolitics.

That leaves markets vulnerable to rapid changes in direction.

This week’s US inflation data may ultimately determine whether investors continue to embrace the prospect of a less aggressive Federal Reserve — or are forced once again to confront the risk that inflation remains too persistent for policymakers to relax.