Oil prices suffered a sharp decline while Wall Street closed higher as geopolitical tensions in the Middle East showed signs of cooling. In a significant diplomatic development, Iran and Oman have announced plans to establish a jointly agreed safe maritime corridor through the strategic Strait of Hormuz, a move that has been widely interpreted as a de-escalation signal.

According to official statements released on Tuesday, Omani Foreign Minister Badr al-Busaidi concluded a working visit to Iran, during which he held constructive talks with his Iranian counterpart, Foreign Minister Seyed Abbas Araghchi. The two sides focused on arrangements to ensure safe navigation in the Strait of Hormuz while respecting each nation's sovereignty and sovereign rights. The proposed framework includes the creation of a mutually agreed safe shipping corridor, joint operational arrangements, and a coordination mechanism involving the coast guards of both countries. Additionally, the two nations agreed to continue coordination on future management of the strait, information exchange, traffic control, and related navigation and safety services. Both sides emphasized the importance of consulting with other Persian Gulf littoral states, adhering to applicable international law, and respecting the sovereign rights of coastal nations.

The Omani foreign minister indicated that specific arrangements for a temporary sea lane in the Strait of Hormuz and the resumption of safe transit could be announced soon. This diplomatic breakthrough comes amid reports that Iranian missile and drone strikes have caused severe damage to U.S. intelligence facilities and surveillance equipment across the Middle East, with repair costs estimated to reach billions of dollars. Four sources familiar with the matter stated the damage exceeded anything the U.S. intelligence community had previously experienced from similar attacks.

Meanwhile, U.S. Secretary of State Marco Rubio has conveyed to multiple allied foreign ministers that Washington currently has no plans to launch a new round of military strikes against Iran. A U.S. official said Rubio made clear that large-scale military operations are not being resumed at this time, although the possibility of retaliation remains open if Iran initiates an attack first. Another official indicated that this policy stance is expected to remain in place at least until after the midterm elections, when military options could be reconsidered.

In financial markets, all three major U.S. stock indexes closed higher on Tuesday, with the Dow Jones Industrial Average rising 0.3%, the S&P 500 gaining 0.32%, and the Nasdaq advancing 0.66%. Nvidia shares climbed 2.2% as investors awaited the company's earnings report scheduled for Wednesday after the market close. Optical communications and memory storage sectors saw broad gains, with Lumentum surging over 6%, Applied Optoelectronics up more than 5%, and Coherent advancing over 4%. Seagate Technology and Western Digital each rose more than 3%, while SK Hynix and Micron Technology gained over 2%. The Livermore China ADR Index closed 1.53% higher. In commodities, international oil prices tumbled amid the easing Middle East situation, with Brent crude futures falling 5.57% and WTI crude futures dropping 4.59%.

Turning to China's hog market, pork prices have continued their downward slide. Since August 19, the benchmark live hog futures contract has been in a persistent decline, closing below the 12,000 yuan per ton mark again on August 25. According to Zhu Di, a hog futures researcher at GF Futures, the recent price pullback is primarily attributed to the concentrated release of supply accumulated from earlier pig retention. In early August, market sentiment was bullish, with farmers reluctant to sell and holding back hogs. As prices rebounded, both large-scale farms and individual households retained pigs simultaneously, slowing overall slaughter progress and postponing supply. Data from Yongyi Consulting shows that as of August 20, corporate slaughter progress had only reached 63.66%, leaving a substantial backlog of hogs to be processed by the end of August. Combined with school season stocking expectations, farmers have moved to execute their slaughter plans in a concentrated manner. Zhu noted that while the school season provides some demand support, the concentrated supply release is suppressing spot prices and driving futures prices lower.

On the demand side, Kong Hailan, a hog researcher at Everbright Futures, said that after the Beginning of Autumn solar term, demand for heavier hogs increased and prices rose, which in turn supported prices for standard-weight hogs. As spot prices continued to climb, hog futures rebounded from low levels. However, against a backdrop of ample supply, farmers' willingness to hold back pigs weakened after prices rose. In mid-to-late August, spot hog prices retreated and futures prices followed suit. As of August 25, the daily average spot hog price across mainstream markets stood at 11.02 yuan per kilogram according to Zhuochuang sample data, down 0.28 yuan per kilogram from the mid-August peak.

Looking ahead to September, Zhu believes supply pressure will persist. The August slaughter plan increased month-on-month, and overall supply scale for August and September has not contracted significantly. If the backlog of fattened pigs from August cannot be fully absorbed by the market, September prices still face downside risks, and excessive optimism is unwarranted. Zhu added that over a longer horizon, capacity reduction is still underway. However, this cycle of capacity reduction has structural characteristics: the elimination targets are primarily low-efficiency sows, while replacement breeding stock consists mostly of high-efficiency sows. The simultaneous culling of low-efficiency herds and introduction of high-efficiency herds has offset the supply contraction effect from declining inventory, making the actual impact of this round of capacity reduction relatively limited. Given these structural changes, Zhu maintains a cautious stance on medium-to-long-term hog prices. If September achieves a decline in average hog weight and sufficient reduction of secondary fattening inventory, a new round of secondary fattening restocking and farmer retention behavior from October onward could boost prices. For the year-end market, he advises neither excessive pessimism nor overly high expectations.

Kong Hailan believes that in the short term, ample supply will continue to pressure spot prices, and both spot and futures hog prices may extend their correction. However, as weather cools and seasonal demand recovers, spot prices could find some support. Over the medium to long term, she maintains a cautiously optimistic outlook.