Asian equities moved lower on Monday as investors waited for Washington to unveil its promised sanctions against Iran later in the day. Crude prices also slipped, while the Canadian dollar weakened amid mounting concerns over a trade conflict with the United States.
The technology sector is meanwhile awaiting Nvidia’s results on Wednesday, with investors aware that the chipmaker faces exceptionally high expectations.
Markets look to Nvidia and the Fed
Analysts generally expect Nvidia’s quarterly revenue to almost double to around $92 billion, while annual profit forecasts range between $103 billion and $105 billion.
Investors are also seeking clues about the direction of US interest rates when Federal Reserve Chair Kevin Warsh speaks in Jackson Hole, Wyoming, on Friday. However, his known reluctance to signal future central bank decisions could leave markets disappointed.
Markets are pricing in an approximately 40% chance of an interest rate increase at the Fed’s 16 September meeting, while fully expecting a move by December.
Those expectations could shift depending on US inflation figures due this week. Median forecasts indicate that core inflation remained at 3.3% in July.
Warsh is also expected to face questions about Treasury Secretary Scott Bessent’s surprise announcement last week that bond buybacks would at least double, in an effort to curb rising yields that are increasing financing costs across the economy.
The initiative has so far had limited success. The yield on the 30-year US Treasury stood at 5.2518%, close to its recent 19-year high of 5.3371%.
Higher yields make bonds more attractive compared with equities and increase the discount rate applied to future earnings, highlighting elevated valuations in some markets.
Iran sanctions weigh on oil
Bessent is expected to hold a press conference later on Monday to present the sanctions against Iran, which has so far shown no willingness to relinquish control of the strategically important Strait of Hormuz.
Brent crude fell 1.4% to $93.07 a barrel ahead of the announcement, although it gained 6.6% last week. US crude declined 1.6% to $85.64 a barrel.
Stock markets were mostly lower. Japan’s Nikkei fell 0.5% after losing almost 4% last week. South Korean technology stocks dropped 2.8%, while Taiwan declined 0.5%, with expectations surrounding Nvidia’s results weighing heavily on sentiment.
The broader MSCI index of Asia-Pacific shares outside Japan fell 1.3%, while Chinese blue-chip stocks lost 1.2%.
Alibaba shares listed in Hong Kong dropped 9.5% after the Chinese e-commerce and cloud computing company announced a $10.2 billion share issue. Investors remain concerned about the returns from the company’s extensive artificial intelligence investments.
Samsung Electronics fell more than 8% after its unprecedented $79 billion shareholder return plan failed to satisfy investors, who had expected a larger share of the profits generated by the artificial intelligence boom.
European and US futures edge lower
In Europe, EURO STOXX 50 and DAX futures fell 0.1%, while FTSE futures were unchanged.
On Wall Street, S&P 500 futures declined 0.1% and Nasdaq futures fell 0.4%.
Canadian dollar hit by trade tensions
In currency markets, the US dollar strengthened 0.2% against the Canadian dollar to 1.3790 after Prime Minister Mark Carney said Canada would respond to US tariffs with duties of its own following the collapse of trade talks.
Canada will impose tariffs on US steel, dairy products, household appliances, agricultural equipment, pulp and paper, and electronic goods. The measures will also cover some products previously targeted by the United States in its tariffs against Canada.
The US dollar remained under pressure against other currencies, having fallen 0.8% last week against a basket of currencies to 96.832.
The euro held at $1.1680 after gaining 0.9% last week, while the dollar was unchanged at 158.92 yen.
The US currency has been pressured by investor concerns that rising US debt and uncertainty over economic policy will erode its purchasing power, strengthening demand for scarcer assets such as gold.
Gold rose 0.8% to $4,653 an ounce, taking its gain since the beginning of August to 15%. If that increase is sustained through the end of the month, it would mark the largest monthly rise on record.
Source: CNA
