To The Moon

Major US indices closed lower on Monday as fresh exchanges of fire between the US and Iran reignited geopolitical concerns. The Dow Jones Industrial Average slipped 0.70%, the S&P 500 dropped 0.33%, and the Nasdaq Composite edged down 0.12%.

Among notable individual movers, Edison International tumbled 23.08%, PG&E Corp fell 20.06%, HWM dropped 7.51%, Sempra Energy retreated 3.10%, Aon slid 9.53%, and GEV declined 1.47%. Conversely, Super Micro Computer rose 0.54%. Within the "Magnificent Seven" group, Nvidia gained 1.36%, while Tesla surged 5.51%, making it the standout performer of the day. Apple fell 0.89%, Meta Platforms lost 0.98%, and Microsoft declined 1.22%. Amazon.com dropped 2.50% following news that the US Federal Trade Commission has filed a lawsuit against the company, while Alphabet (Google) retreated 2.18%.

On Sunday, the US Central Command confirmed to MSNOW that American forces had struck two rocket launch sites on Iran's Larak Island. This marks the first time since late July that the US has publicly acknowledged carrying out military strikes on Iranian targets. In response, Iranian state media reported that Tehran launched attacks on a US military base in Jordan as retaliation. With hostilities between the two nations escalating once again, oil prices rose sharply. West Texas Intermediate crude for October delivery jumped $2.36 to settle at $85.76 per barrel, a gain of 2.83%, while November Brent crude climbed $2.39 to close at $90.49 per barrel, up 2.71%.


Where to Begin Your Analysis

The intensifying Middle East tensions contributed to a turbulent month of trading in August. Despite the volatility, Wall Street's major indices remain on track to end the month in positive territory, driven largely by the technology sector. The Dow is up 2.1% month-to-date, poised for its fifth consecutive monthly gain. Both the S&P 500 and the Nasdaq Composite are on course for their first monthly advance since May, with gains of approximately 3% and 4%, respectively. Earlier in August, the S&P 500 and the Dow both set record highs.

Tech stocks have led the rally this month, with artificial intelligence-related shares showing particularly strong performance. The S&P 500 technology sector has climbed nearly 6% in August, buoyed by gains of more than 8% in Nvidia, while Microsoft and Micron Technology advanced 10% and 13%, respectively.

That said, August remained a choppy period for markets overall. Inflation worries pushed US Treasury yields to multi-year highs. While the Treasury Department announced an expansion of its bond buyback program in an effort to curb the sell-off in debt markets, long-duration yields stayed elevated.


Only a Handful of ASX 200 Stocks Are Driving Gains

Federal Reserve Chair Kevin Warsh expressed concerns about inflation, noting that while summer inflation data came in better than expected, it does not signal a substantial improvement in the underlying inflationary trend. Barclays economist Jonathan Miller wrote in a research note that the hawkish tone, while not necessarily a precursor to policy tightening in September given Warsh's reluctance to signal policy moves, does raise the probability of a 25-basis-point rate hike next month to above 50%. In light of these inflation projections, Miller added that the bank's base case now includes another rate increase in December.

Société Générale has issued a warning that the Fed could raise rates three times by March of next year. The French bank predicts the Fed will begin raising rates in September, driven by persistent inflation and an improving labor market that is pushing policymakers toward a more restrictive stance. According to the latest report from Société Générale Chief US Economist Jan Gruen, the bank now forecasts rate hikes of 25 basis points at both the September and December meetings, followed by an additional increase in March 2027. The report noted, however, that the certainty surrounding the final rate hike remains relatively low.

Investors will receive fresh signals on the US economy this week, with the August nonfarm payrolls report due early Friday morning. Monthly manufacturing and services PMI figures are also scheduled for release. In Asian markets, Japan's Nikkei 225 slipped 0.14%, while South Korea's KOSPI reversed early losses to close up 0.46%. Mainland China's CSI 300 gained 0.35%, and Hong Kong's Hang Seng Index finished flat. Australia's S&P/ASX 200 declined 0.18% to 9,076 points.

European markets closed broadly lower on Monday. The pan-European STOXX 600 fell 0.61%, the Euro STOXX index declined 0.76%, and the eurozone blue-chip index lost 0.91%. France's CAC 40 dropped 0.6%, Spain's IBEX slipped 0.23%, and Germany's DAX retreated 1.09%. Energy stocks were buoyed by the surge in oil prices, though UK markets remained closed for a public holiday.