Shares, oil slip awaiting US details of Iran sanctions

SYDNEY – Share markets were flat in Asia on Aug 24 and oil prices eased as investors awaited details of threatened US sanctions on Iran due later in the session, while the Canadian dollar dipped as a trade war loomed with its southern neighbour.

The tech sector is holding its breath for Nvidia’s results on Aug 26, as investors are aware how hard it will be for the chipmaker to meet stratospheric expectations.

Analysts are generally looking for quarterly revenue to almost double to around US$92 billion (S$117 billion), with full-year earnings guidance seen in a range of US$103 billion to US$105 billion.

Market participants are also hoping for some clarity on the outlook for US interest rates when Federal Reserve Chairman Kevin Warsh speaks in Jackson Hole, Wyoming, on Aug 28, though his well-known aversion to forward guidance could lead to disappointment.

“There are several reasons to expect to be underwhelmed,” said Bruce Kasman, chief economist at JPMorgan, noting that past chairs have not wanted to front-run Fed decisions at the event.

“Warsh will rather likely focus on aspects of his ‘regime change’ agenda,” Kasman added.

“As the Fed has already been moving toward shrinking the balance sheet, and the committee gave the balance sheet some attention in the July minutes, that might be the most likely topic for him to expound upon.”

Markets imply around a 40 per cent chance that the Fed will raise interest rates when it meets on Sept 16 and are fully priced for a move by December.

The odds could change depending on what US inflation figures show this week, with median forecasts for core inflation expected to hold at 3.3 per cent in July.

Warsh is sure to face questions about Treasury Secretary Scott Bessent’s surprise announcement last week of at least a doubling in bond buybacks, aimed at restraining a rise in yields that was tightening financial conditions in the economy.

His efforts have had little success so far, with 30-year yields at 5.2518 per cent, not far from the recent 19-year peak of 5.3371 per cent.

Higher yields make debt more attractive compared to equities while lifting the discount applied to future earnings, highlighting the stretched nature of some valuations.

Sanctions and trade wars

Bessent is due to hold a news conference later on Aug 24 to outline sanctions on Iran, which has shown no sign of relinquishing its control over the vital Strait of Hormuz.

Brent slipped 1.4 per cent to US$93.07 ahead of the announcement, though that followed gains of 6.6 per cent last week. US crude eased 1.6 per cent to US$85.64 a barrel.

Equity markets were mostly lower, with the Nikkei off 0.5 per cent, having fallen almost 4 per cent last week.

Tech-heavy South Korean shares slid 2.8 per cent, while Taiwan lost 0.5 per cent with so much riding on Nvidia.

MSCI’s broadest index of Asia-Pacific shares outside Japan eased 1.3 per cent, while Chinese blue chips fell 1.2 per cent.

The Hong Kong-listed shares of Alibaba slid 9.5 per cent after the Chinese e-commerce and cloud computing company launched a US$10.2 billion share offer and investors worried about payback from its massive AI spending.

Samsung Electronics fell over 8 per cent after a record US$79 billion shareholder-return plan disappointed investors who had expected a larger share of AI-fueled cash windfalls.

In Europe, Euro Stoxx 50 futures and DAX futures eased 0.1 per cent, while FTSE futures were flat. On Wall Street, S&P 500 futures fell 0.1 per cent and Nasdaq futures lost 0.4 per cent.

In currency markets, the dollar added 0.2 per cent against its Canadian counterpart to 1.3790 after Prime Minister Mark Carney said his country would respond to US tariffs with levies of its own as trade talks broke down.

Canada will impose tariffs on US steel, dairy, appliances, agricultural equipment, pulp and paper and electronics, along with some products that the US previously targeted in Canada.

The dollar was on the defensive elsewhere after having lost 0.8 per cent last week against a basket of currencies at 96.832.

The euro held at US$1.1675 after rising 0.9% last week, while the dollar was flat at 159.00 yen.

The dollar has been undermined as investors fret that growing US debt and policy uncertainties will erode the purchasing power of the currency, driving demand for scarcer assets including gold.

The yellow metal firmed another 0.8 per cent to US$4,653 an ounce , having climbed 15 per cent for the month so far.

If it holds this gain for all of August, it would be the biggest monthly rise on record. REUTERS