MARKET WRAPS
Stocks:
European shares were mixed Monday as a flare-up in fighting between the U.S. and Iran sent oil prices higher.
Brent crude futures were trading above $90 a barrel after the U.S. conducted its first strikes in weeks, hitting two Iranian launchers in the Strait of Hormuz.
The attacks were "a fresh reminder that this conflict still has plenty of dry tinder lying around," SPI Asset Management said.
Julius Baer said oil prices are likely to decline in the near term. It expects oil prices to drop into the $70s a barrel in 2026 and into the $60s in 2027.
"The chit-chat of the day is about exchange estimates of how much oil is transiting through the Strait of Hormuz," Julius Baer added.
On the economic front, provisional inflation data for August in the eurozone is due Tuesday and will be the key focus in the coming week, giving an important pointer about the impact of energy prices.
In the U.K., financial markets are closed Monday for a public holiday.
U.S. Markets:
Stock futures were mostly lower Monday after Federal Reserve Chairman Kevin Warsh hinted at a possible rate rise due to inflation concerns.
Focus will now turn to U.S. jobs data due Friday as investors assess the health of the economy and the likely timing of when the Fed could raise interest rates.
Forex:
The dollar edged lower Monday following strong gains on Friday. "Fed Chairman Kevin Warsh's Jackson Hole speech was the clear market mover," BNY said.
Commerzbank said any rise in the U.S. dollar could be limited. Ahead of September's Fed meeting will be Friday's U.S. jobs data, where another weak figure could "trigger a significant [dollar] correction."
Bonds:
Eurozone government bond yields edged higher, taking the 10-year Bund yield to a 15-year high, according to LSEG data.
Treasury yields edged lower in early trade, trimming some of Friday's massive rises in short-end yields following Federal Reserve Chairman Kevin Warsh's hawkish speech in Jackson Hole.
Energy:
Oil prices rose Monday as a resurgence in Middle East hostilities boosted concerns over supply disruptions in the region. Front-month WTI crude oil futures rose 2.3% and front-month Brent crude oil futures added 2.5%, ICE data showed.
Metals:
Gold declined in early trade. The precious metal's current pullback below the $4,600 level is likely to be a natural correction on profit-taking after a strong upward rally, said XS.
Copper
Copper was little changed in early trade. Strong fundamentals continue to provide support while growing expectations for the Fed's rate increases cap the upside, Guangzhou Futures said.
Iron ore
Iron ore was higher in early trading. The commodity's supply and demand dynamics have improved, Nanhua Futures said.
EMEA HEADLINES
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A deal could be announced as soon as Monday, the people said, assuming it comes together.
The Geopolitical Mismatch Driving Russia to Threaten the West
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The Kremlin, whose refineries, ports and defense industries are also under attack by Ukrainian missiles and drones, has no such backup. Hits to Russia's militarized economy translate more directly into damage to the country's ability to keep the war going.
The Summer That Scorched French Grapes, English Gardens-and Europe's Economy
BORDEAUX, France-For 700 years, Château Carbonnieux relied on rainwater to nourish its grapes, a tradition that preserved the vineyard's connection to the local terroir.
Then temperatures rose to a record-breaking 108 degrees Fahrenheit in June, and co-owner Philibert Perrin noticed the leaves of his Cabernet Sauvignon grapes turning yellow and shriveling, an ominous sign. So he did the unthinkable: He sent a tractor rigged with a water tank and hoses into the vineyard to hydrate his most vulnerable vines.
The World's Drinks Order Is In. Distillers Were Expecting More.
It's the corporate equivalent of ordering too much alcohol for a house party where half the guests turn out to be dry. Except with billions of dollars at stake and a no-returns policy.
Distillers' warehouses are crammed with barrels of aging spirits laid down in better times that fewer people want to drink these days. The problem doesn't only affect bourbon in the U.S. There is a global glut of cognac, Irish whiskey and Scotch whisky too. Investors tempted by alcohol companies' low stock-market valuations should look at their saturated balance sheets first.
GLOBAL NEWS
Warsh Makes the Case for Higher Rates and Raises the Bar for Standing Pat
JACKSON HOLE, Wyo.-Fed Chairman Kevin Warsh put to rest some concerns about his inflation-fighting strategy but set up a potentially bigger test three weeks from now. If the Fed raises interest rates, he risks infuriating the White House weeks before the midterm elections. If he holds, he could revive the doubts that Friday's speech here quieted.
The central bankers gathered in the Tetons this weekend were unsure how much the Fed's new chairman would tell them about how he reads the economy. Warsh had been criticized after last month's meeting, including by several conference attendees, for not explaining how the Fed's current stance would bring inflation down.
Fighting Flares in Middle East After U.S. Strike on Iranian Rocket Launchers
WASHINGTON-U.S. forces attacked two Iranian rocket launchers in the Strait of Hormuz on Sunday, the U.S. Central Command said, marking the first American strike in weeks and heightening the risk of a return to all-out conflict in a region already battered by war.
The command said that the Iranian launchers, which were deployed on Larak Island, were preparing to fire rockets filled with sea mines into the strait when they were struck.
Buckle Up for Wall Street's Worst Month
September tends to be Wall Street's worst month, and this year may be no different.
Based on historical returns data, all three major indexes see their worst average returns of any month in September.
Fighting Flares in Middle East After U.S. Strike on Iranian Rocket Launchers
WASHINGTON-U.S. forces attacked two Iranian rocket launchers in the Strait of Hormuz on Sunday, the U.S. Central Command said, marking the first American strike in weeks and heightening the risk of a return to all-out conflict in a region already battered by war.
The command said that the Iranian launchers, which were deployed on Larak Island, were preparing to fire rockets filled with sea mines into the strait when they were struck.
Icelanders Reject EU-Membership Talks
Icelanders voted against restarting negotiations on joining the European Union in a nationwide referendum Saturday, rejecting arguments that their small island nation should pull closer to Brussels after President Trump's threats to annex Greenland.
Results published by national broadcaster RÚV on Sunday said 52.8% of voters didn't want their government to reopen talks with the EU, compared with 47.2% who favored talks. The government said it would respect the outcome.
NASA Launches New Telescope Equipped With Repurposed Spy Gear to Survey Galaxies
The National Aeronautics and Space Administration launched a new flagship telescope, a powerful observatory device that will study so-called dark matter and hunt for other planets.
A SpaceX rocket took off with the device, called the Nancy Grace Roman Space Telescope, just before 7:30 a.m. ET Sunday from a launchpad in Florida. The launch went smoothly, setting up the telescope to fly out to an orbit about one million miles from the planet.
Putin Turns Again to China's Xi as Russia's Clout Crumbles
In the months since Russian President Vladimir Putin last met his most important strategic partner, China's Xi Jinping, their wartime fortunes have sharply diverged.
While Russia suffered a summer of painful strikes by Ukraine on its oil-and-gas industry and other economically vulnerable targets, China emerged from the global shock of the Iran war with more power over oil markets and greater resilience against the West.
Write to priscila.barrera@wsj.com