(The opinions expressed here are those of the author.)

By Anna Szymanski

August 7 (Reuters) - Your weekly market recap, with reading,

watching and listening recommendations from the ROI team

From the Editor

Tech earnings hogged the spotlight this week, as both SpaceX and

chipmaker AMD failed to impress investors despite revenue beats,

with concerns remaining about the durability of the AI spending

spree. Meanwhile, the prospect of yet another interim U.S.-Iran

deal pushed down crude prices, but optimism appeared to be

fading heading into the weekend.

This week's earnings bonanza extended well beyond the tech

sector, with notable reports coming from the likes of pharma

giants Eli Lilly and Merck, oil major ConocoPhillips, industrial

bellwether Caterpillar and media group Disney. Results were

mostly impressive, as might be expected when aggregate annual

S&P 500 earnings growth is on track to hit nearly 50% this

quarter, according to LSEG data.

At the same time, some of the week's post-earnings stock slides

were also eye-catching. AMD closed 7% lower on Wednesday, while

high-flying data storage companies Sandisk and Western Digital

slumped on Thursday after posting their own revenue beats.

SpaceX shares fell nearly 14% on Wednesday after its first

earnings release as a public company, reflecting investor

anxiety about its massive AI outlays, but Elon Musk's satellite

company rebounded on Thursday. Concerns remain about whether the

expiry of the first share lockup period on Thursday could

further pressure the stock.

Moving over to energy, all the oil majors, including Exxon,

Chevron, TotalEnergies and BP, have now reported second-quarter

earnings - and refining profits have been eye-popping. Exxon

posted downstream profits of $5.5 billion in the second quarter,

its strongest result since 2022, driven by record diesel

production, while Chevron's downstream earnings climbed to $4.9

billion, their highest level this decade.

And BP's refining-indicator margin, a measure of global

refining profits, rose to $30 per barrel in the second quarter

from $12 a year earlier.

These wide margins reflect the extreme shortage in refining

capacity, caused by the limited supply of crude exiting the

Strait of Hormuz, Iranian attacks on refineries across the Gulf,

and Ukrainian strikes on Russian energy facilities. But given

that the long-term fundamentals in the refining sector remain

unsupportive, this "golden era" is unlikely to last.

In other energy news, the seven members of OPEC+ that have

undertaken voluntary output cuts - Saudi Arabia, Russia, Iraq,

Kuwait, Algeria, Kazakhstan and Oman - on Sunday agreed to

increase production by 188,000 barrels per day in September.

For the moment, this change doesn't really matter, as the

producers couldn't meet their previous quotas given the

war-related disruption. But the announcement is still important

because it signals that production will likely ramp up

quickly whenever the Strait of Hormuz finally reopens.

There were indications this week that this could happen soon,

with Iran signalling it was nearing a deal with Oman regarding

oversight of the critical waterway. The proposed agreement would

give Tehran control over ships entering the Gulf through

Hormuz, sources told Reuters on Wednesday.

If U.S. President Donald Trump were to accept this

arrangement, it would be a huge concession to Iran, meaning any

deal centred on this plan would be fragile to say the least.

Yet oil markets appear to be betting that everything will work

out just fine. Brent crude prices drifted back toward $80 a

barrel by midweek, roughly where they traded before the signing

of the short-lived U.S.-Iran ceasefire in June. However, news on

Thursday that Yemen's Iran-aligned Houthis had attacked Saudi

Arabia caused oil prices to rise above that level, though only

modestly.

If the crude market's optimism about seeing a sustainable deal

implemented was misplaced in June, it appears even less

understandable now. The global energy system is far more fragile

today than it was two months ago. Inventories are further

depleted, the trapped supply available to flood the market has

shrunk, and the conflict has expanded beyond Hormuz.

Can the energy system continue to defy expectations with its

adaptability? We shall see.

In currency markets, the U.S.-Japan FX intervention that

unfolded late last week appears to have calmed markets - at

least for now. The yen is currently trading around the

158-per-dollar range, compared to the 40-year low near 164 per

dollar hit before the joint action.

That is still weaker than at the start of the week, though, and

for a longer-lasting fix, Japan will need to address its

underlying issues, namely concerns about overly loose monetary

and fiscal policy as well as central bank credibility.

Many questions about the intervention remain, not least

the head-scratching choreography surrounding it. But the bigger

worry is what it could signal.

For the first time in recent memory, U.S. Treasuries,

Japanese government bonds and the U.S. dollar/yen exchange rate

- one of the most important in the world - have all been under

pressure simultaneously, at the same time that central bank

credibility issues have risen in both countries.

While no one should expect this perfect storm to lead to an

imminent crisis, the historic U.S. action last week may signal

that Washington believes the risk of an "accident" has

increased.

Finally, investors have been getting more insight into the U.S.

labor market this week in the lead-up to today's release of the

July nonfarm payrolls report. ADP figures on Wednesday showed

private employers added 44,000 workers last month, slowing from

95,000 in June.

Friday's release is expected to show that the U.S. economy added

80,000 jobs in July, following a 57,000 gain in June, with no

change to the 4.2% unemployment rate, according to economists

polled by Reuters.

Futures markets are pricing in a little more than a 50% chance

of a rate hike at the Federal Reserve's September meeting, down

from a near certainty only a few weeks ago, reflecting the

reduction in crude prices and Warsh's mixed signals at the

recent Fed meeting.

But inflationary pressure may still be building from a

potent mix of still-elevated fuel costs, loose financial

conditions, fiscal stimulus, and booming investment.

With unemployment still low and inflation above target for five

years running, it's reasonable to ask whether the "cautious" Fed

may inadvertently be allowing the economy to overheat. An

ultra-soft jobs report today might change that view - but only

slightly.

I'll be off on holiday next week, but in my absence, you'll

be treated to another piece from Mike Dolan.

For more data-driven insights on markets and commodities, check

out Reuters Open Interest. You can learn:

* Could a data center reality check kill the earnings boom?

* Could AI end Wall Street's EPS obsession?

* Why might the U.S.-Japan yen intervention be a blow to

multilateralism?

* Is Wall Street's performance more average than

"exceptional"?

* How does the Iran war help - and harm - BP's turnaround

plans?

* Will natural gas soon be phased out of the U.S. power mix?

* Are we seeing K-shaped inflation?

* Is China's EV export boom starting to dent global gasoline

demand?

* How quickly are Asia's crude oil imports recovering?

I'd love to hear from you, so please reach out to me at .

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