US stocks were mostly lower as oil prices and yields rose amid US-Iran flare up - Newsquawk Daily Asia-Pac Market Open

• US stocks started the week predominantly lower as resumed US-Iran strikes over the weekend increased geopolitical and growth risk for the market, although the Nasdaq 100 rallied into the close to settle with marginal gains. Oil prices rose, which added further upward pressure to the belly and long-end yields, with the 10yr yield at its highest since January 2025, while sectors were mostly in the red, except Energy, which benefited from higher oil prices, and Tech, which eked out marginal strength, with Nvidia holding onto post-earnings gains from last week. Utilities underperformed after bearish sentiment built from Friday's news that California lawmakers blocked proposed wildfire liability reforms, and PG&E (PCG -20%) received multiple downgrades.
• USD trickled lower on the day in light currency-specific newsflow, with the highlight the escalating US/Iran tensions after they exchanged strikes over the weekend, while there was no tier 1 data and although Fed Chair Warsh spoke next to Treasury Secretary Bessent at the G20 meeting, he didn't provide much relevant for Fed policy.
• Looking ahead, highlights include Australian Manufacturing PMI, Building Approvals, Current Account & Net Exports Contribution to GDP, Regional PMIs, Chinese RatingDog Manufacturing PMI, Indonesian CPI, Supply from Australia & Japan.

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LOOKING AHEAD

• Highlights include Australian Manufacturing PMI, Building Approvals, Current Account & Net Exports Contribution to GDP, Regional PMIs, Chinese RatingDog Manufacturing PMI, Indonesian CPI, Supply from Australia & Japan.
• Click for the Newsquawk Week Ahead.

IRAN CONFLICT

• US President Trump posted that Iran is a “failed nation,” claiming its military, economy and leadership are in disarray, while accusing the government of killing protesters and spreading misinformation.
• US President Trump said the US will respond to Iranian attacks, according to Fox.
• US President Trump said Iran strikes will be limited and that the Strait of Hormuz is in extremely good shape, while he added that a lot of oil is coming out of Hormuz and they are averaging 30 ships a night out of Hormuz. Furthermore, he said we'll see what happens regarding Iran.
• US President Trump was earlier reported to be weighing limited strikes against Iran, according to Axios. President Trump and his senior aides have been considering limited strikes in the Strait of Hormuz to prevent Iran from reconstituting its radar and missile capabilities to attack ships, according to three US officials. One incident that raised concern in recent days was the launch of an Iranian anti-aircraft missile toward a US F-35 fighter jet that was providing cover to ships in the strait, and while the missile did not come close enough to be a threat, it was a signal that Iran is trying to reconstitute its military capacity.
• US Treasury Secretary Bessent said Iran is taking sanctions seriously and the US will continue exerting pressure. He also stated Iran is lashing out kinetically because it is losing economically, while adding that Iran's economy does not have to collapse and that it just needs to come to its senses.
• US Treasury Secretary Bessent said oil prices will come down and noted that President Trump has been saying Iran is not ready to make a deal, according to a CNBC interview. Furthermore, Bessent said "Operation Outcast" will make Iran make a deal, adding that the goal is to create a condition that would make Iran want to come to the table.
• US official said the US military did not target Kharg Island in overnight strikes, according to reports.
• US CENTCOM said no ships have hit mines in the Strait of Hormuz and described reports as another IRGC attempt to intimidate regional commercial shipping through disinformation.
• Senior Iranian source said Tehran’s retaliation for US strikes on Larak showed “no target in the region is beyond Iran’s reach,” warning that Iran would respond to every US attack with force “dozens of times greater”, according to Reuters. The source added that recent hostilities between Iran and the US remain a “limited and contained confrontation” and warned that conditions in the Strait of Hormuz will worsen for vessels that violate Tehran’s rules.
• IRGC Navy Commander said no oil will be allowed to pass through the Strait of Hormuz, according to Mehr News, while IRGC said its defences shot down an enemy MQ-9 drone east of the Strait of Hormuz.
• Iranian President Pezeshkian said Tehran is still looking to reach an agreement and believes the continuation of the war is not in anyone's interest in the region. He also said that the solution to existing problems lies in dialogue and cooperation.
• Pakistan’s PM Sharif met Iranian President Pezeshkian on the sidelines of the SCO summit to discuss recent developments and cooperation between Islamabad and Tehran.
• Yemeni armed forces reportedly targeted Saudi ships in the Red Sea, according to ISNA citing Yemeni media reports.
• UKMTO said it received a report of an incident involving a tanker and military forces in the Indian Ocean.

US TRADE

• US stocks started the week predominantly lower as resumed US-Iran strikes over the weekend increased geopolitical and growth risk for the market, although the Nasdaq 100 rallied into the close to settle with marginal gains. Oil prices rose, which added further upward pressure to the belly and long-end yields, with the 10yr yield at its highest since January 2025, while sectors were mostly in the red, except Energy, which benefited from higher oil prices, and Tech, which eked out marginal strength, with Nvidia holding onto post-earnings gains from last week. Utilities underperformed after bearish sentiment built from Friday's news that California lawmakers blocked proposed wildfire liability reforms, and PG&E (PCG -20%) received multiple downgrades.
• SPX -0.33% at 7,686, NDX +0.08% at 29,457, DJI -0.70% at 53,191, RUT -0.54% at 2,956.
• Click here for a detailed summary.

TARIFFS/TRADE

• US Treasury Secretary Bessent said he will meet his Canadian counterpart at the G20 and said the US is not in a war with Canada, while he added that Canadian PM Carney turned this into a shouting match and is not doing what is best for the Canadian people.

NOTABLE HEADLINES

• Fed Chair Warsh said economic growth in the US appears to have strengthened and the US will stay reform-oriented on banking regulations. Fed Chair Warsh separately commented that his prior relationship with Bessent has proven fruitful.
• US President Trump said Fed Chair Warsh will do what he has to do and that interest rates are too high.
• US President Trump announced new drug-pricing agreements, with nine new pharma companies committing to low prices.
• US Treasury Secretary Bessent made a case for lighter financial regulation at the G20 finance ministers gathering on Monday, arguing to CEOs that post-crisis rules have squeezed small banks, according to Axios.
• US Agriculture Secretary Rollins announced measures to support the beef industry, including loans for small meat processors and allowing conserved land to be used for grazing.

DATA RECAP

• US Dallas Fed Manufacturing Index (Aug) 11.6 (Prev. 1.3)

FX

• USD trickled lower on the day in light currency-specific newsflow, with the highlight the escalating US/Iran tensions after they exchanged strikes over the weekend, while there was no tier 1 data and although Fed Chair Warsh spoke next to Treasury Secretary Bessent at the G20 meeting, he didn't provide much relevant for Fed policy.
• EUR benefitted from the softer dollar and reclaimed the 1.1600 handle, while participants await EU PMIs and inflation data.
• GBP kept afloat in relatively sideways trade with price action contained amid the UK Summer Bank Holiday closure.
• JPY mildly strengthened against the buck with USD/JPY pulling back from the 160.00 level.
• SNB's Tschudin said there is more willingness to intervene in FX if needed.

FIXED INCOME

• T-notes settled lower after the belly and long-end yields crept higher, while the short-end yields paused after rallying on Friday on the hawkish Fed Chair Warsh speech.

COMMODITIES

• Oil prices saw gains to start the week as US/Iran tensions continue to bubble over.
• US President Trump said they will fill up the strategic reserve and want to do it with Venezuelan oil, while he said it is up to Venezuela regarding leaving OPEC.
• Stocks of crude oil in the US SPR fell by about 3.1mln barrels to 286.6mln barrels last week.

GEOPOLITICAL

RUSSIA-UKRAINE

• Ukrainian President Zelensky said he had a good phone conversation with President Trump's representatives Witkoff and Kushner, while he said they are now discussing setting a date for a visit to Ukraine.
• Ukrainian President Zelensky will send his top sanctions adviser to Capitol Hill this week in a bid to convince House lawmakers to drop their opposition to the Senate-passed Russia sanctions bill, according to Punchbowl.
• Russia struck a cargo vessel at the Ukrainian port of Pivdennyi, according to the Russian Defence Ministry.
• Russian President Putin and Chinese President Xi discussed Ukraine at the SCO meeting, but it was not the main theme of their discussion, while Xi told Putin that the foundation of China-Russia relations will be more solid and prospects brighter.

ASIA-PAC

NOTABLE HEADLINES

• CXMT (688825 CH) has reportedly begun producing HBM3E in small quantities, according to The Information.
• Japan’s government is to request JPY 143tln for the budget (general account) in FY27, according to Nikkei citing sources.

DATA RECAP

• Indian GDP Growth Rate (Q2 YY) 7.8% vs. Exp. 7.1% (Prev. 7.8%)

EU/UK

DATA RECAP

• German CPI Prel (Aug YY) 2.9% vs. Exp. 3.0% (Prev. 2.8%)
• German HICP Preliminary (Aug YY) 2.9% vs. Exp. 3.1% (Prev. 2.8%)