Key facts
- Asian share markets were flat, and oil prices eased ahead of U.S. sanctions on Iran.
- Nvidia's quarterly revenue is expected to nearly double, with full-year guidance between $103 billion and $105 billion.
- Federal Reserve Chairman Kevin Warsh is expected to speak on balance sheet reduction at Jackson Hole.
- Markets price in a 40% chance of a Fed rate hike in September and a full move by December.
- Canada announced retaliatory tariffs against the U.S. in response to new U.S. levies.
- Gold prices rose, on track for a record monthly gain.
Share markets in Asia traded flat on Monday, with oil prices easing as investors awaited the announcement of U.S. sanctions on Iran and key earnings results from Nvidia. The Canadian dollar also weakened due to an impending trade war with the United States.
Investors are keenly awaiting Nvidia's earnings report, with analysts projecting a near doubling of quarterly revenue to approximately $92 billion and full-year earnings guidance between $103 billion and $105 billion. The market is also looking for direction on U.S. interest rates from Federal Reserve Chairman Kevin Warsh's speech at Jackson Hole, though his known aversion to forward guidance may limit clarity.
Bruce Kasman, chief economist at JPMorgan, suggested that Warsh might focus on the Federal Reserve's balance sheet reduction rather than providing explicit forward guidance on interest rates. Current market pricing indicates a 40% probability of a Federal Reserve rate hike in September, with a full rate increase fully priced in by December. This outlook could be influenced by upcoming U.S. inflation figures, with core inflation forecast to remain at 3.3% in July.
Treasury Secretary Scott Bessent's recent announcement of at least doubling bond buybacks, aimed at curbing rising yields and tightening financial conditions, is also a point of focus. However, these efforts have shown limited success, with 30-year Treasury yields remaining near a 19-year peak. Higher yields tend to make debt more attractive than equities and increase the discount rate applied to future earnings, potentially highlighting stretched valuations in some market segments.
Ahead of the news conference detailing sanctions on Iran, Brent crude futures fell 1.0% to $93.43 a barrel, following a significant gain last week. U.S. crude also eased 1.1% to $86.14 a barrel. Equity markets in early trade were subdued, with Japan's Nikkei index near flat after a substantial decline the previous week. South Korean shares fell 0.8%, and Taiwanese stocks dipped 0.5%. MSCI's broadest index of Asia-Pacific shares outside Japan decreased by 0.2%.
Futures for major European indices like the EURO STOXX 50, DAX, and FTSE were little changed, as were S&P 500 and Nasdaq futures on Wall Street. In currency markets, the dollar gained 0.1% against the Canadian dollar to 1.3784 after Canadian Prime Minister Mark Carney stated the country would respond to U.S. tariffs with its own levies amid stalled trade talks. Canada plans to impose tariffs on various U.S. goods, including steel, dairy, and electronics.
The dollar faced broader weakness, having declined 0.8% against a basket of currencies in the previous week. The euro held steady at $1.1675, and the dollar was flat against the yen at 159.00. Investor concerns about rising U.S. debt and policy uncertainties are contributing to a potential erosion of the dollar's purchasing power, increasing demand for assets like gold. Gold prices rose 0.4% to $4,623 an ounce, on track for its largest monthly gain on record.