Morning Note: A Round-up of Global Financial Market News.
Market News
Risk assets began the week on a subdued note ahead of key tech earnings and the Federal Reserve’s annual gathering. Canada is planning retaliatory tariffs on some US goods after trade talks collapsed, adding to broader economic uncertainty.
Investors are looking to Fed Chair Kevin Warsh’s comments at Jackson Hole, Wyoming, for clues on the path for interest rates as elevated oil prices stoke inflation pressures and bond yields soar to multi-decade highs.
Traders are bracing for Nvidia’s earnings on Wednesday and guidance to gauge whether this year’s rally in AI shares has further to run. The company was also in the news after notifying customers about price hikes, adding to concerns over the sustainability of the AI spending boom, with soaring hardware costs threatening returns just as companies commit ever-larger sums to the technology.
In Asia this morning equities moved lower: Nikkei 225 (-0.7%); Hang Seng (-1.8%), Shanghai Composite (-0.8%); Kospi (-3.1%). Samsung Electronics slid 9% as investors were underwhelmed by its plans to return as much as 110 trillion won ($80bn) to shareholders. Alibaba Group also tumbled 9% after announcing plans to raise HK$80bn ($10.2bn) in a share sale. As sentiment weakened, Nasdaq 100 futures declined 0.8%, while European shares are down at the open. The FTSE 100 is currently little changed at 10,808.
Hedge funds have increased bearish dollar bets. Treasuries rose ahead of a fiscal consolidation plan announcement by US Treasury Secretary Scott Bessent. The 10-year US yields 4.71%.
Gold is trading at $4,630 an ounce, extending last week’s gains and reaching its highest level since mid-May, as concerns over US debt management and fiscal sustainability persisted following the Treasury’s unexpected ramp-up in longer-dated debt buybacks. The so-called debasement trade is boosting gold’s appeal as an alternative store of value.
Brent crude oil dropped to $93 a barrel following a sharp weekly rally, as investors took profits ahead of an expected US announcement on tougher sanctions against Iran. US Treasury Secretary Scott Bessent said Washington would impose the “toughest” sanctions in history, describing the measures as an unprecedented campaign of economic isolation designed to pressure Iran and its trading partners into compliance.
10-year Gilt yields remain above 5% as markets continue to anticipate tighter monetary policy. Traders are pricing in one Bank of England rate increase by the end of this year and another quarter-point hike by April next year. Sterling trades at $1.3645 and €1.1680.
Source: Bloomberg
