Stock futures were down Tuesday while global bond yields surged as
renewed tension in the Middle East reinforced inflation expectations.
Oil traded above $91 a barrel, as fresh hostilities between the U.S. and Iran raised concerns over supply from the Persian Gulf.
"The key is whether this ignites further rounds of strikes from both sides, and whether it leaves shippers hesitant to navigate the Strait of Hormuz," ING said.
Meanwhile, global bond yields traded at multiyear highs in early European trade amid growing investor conviction that the Federal Reserve will raise interest rates at its next policy meeting.
Markets are now pricing a 67.5% probability of a 25 basis-point rate hike in September, according to LSEG.
Yields on 10-year Japanese government bonds touched levels not seen since 1996, while yields on 30-year U.K. gilts jumped to their highest level since 1998. In the U.S., 10-year yields rose to their highest level since January 2025.
"The rise in global yields continues unabatedly," KBC Bank said. "Ongoing elevated oil/energy prices, markets anticipating tighter monetary policy and higher (fiscal) risk premia all are possible explanations for this trend move."
Looking ahead, investors will be keeping an eye on August's Institute for Supply Management manufacturing data and the latest job openings report, both due today.
Watch For:
U.S. ISM Report on Business Manufacturing PMI for August
Today's Top Headlines/Must Reads:
- Washington's Deadly New Headache: an al Qaeda-Houthi Terrorist Alliance
- How Amazon's 'Secret' Ad Pricing System Worked, According to the FTC
- Jersey Mike's Is Winning the Sandwich War. It Still Needs to Win Over Gen Z.
MARKET WRAPS Forex:
The dollar rose on the prospect of the Federal Reserve raising interest rates, potentially as early as this month.
Bonds:
The 10-year Treasury yield rose to its highest level since January 2025, in early trade, as the selloff in the global bond market continues on the back of flared-up hostilities in the Middle East, adding to inflation fears.
Energy:
In early morning European trade, Brent crude oil for November delivery rose 1.35%, while WTI's most-traded contract rose 1.5%.
Metals:
Gold prices held below $4,500 a troy ounce as a global selloff in government bonds raises the likelihood of a Fed rate hike, dimming the attractiveness of the precious metal.
"The precious metal now looks vulnerable to selling, as the market adjusts to the apparent shift in the monetary policy backdrop," ANZ said.
TODAY'S TOP HEADLINES
Jersey Mike's Is Winning the Sandwich War. It Still Needs to Win Over Gen Z.
Affluent older Americans might be the best customers in U.S. dining. They have savings, are relatively insulated from economic swings and, most valuable to a restaurant chain, prefer the familiar to the trendy.
Jersey Mike's Subs, which recently went public after a Blackstone takeover, spent decades cultivating exactly that customer. Now, valued at roughly $7.5 billion and aiming to grow from about 3,300 stores to 15,000 worldwide, the sandwich chain has to prove its formula can work with a younger generation that's less well-off. That won't be easy, and the stock already assumes much of it goes right.
Shein Makes Ho-Hum Market Debut After Years of Geopolitical Drama
SINGAPORE-Shein, the Chinese fast-fashion giant that won over young Americans with $3 T-shirts and $10 jeans, made a subdued stock-market debut after years of geopolitical drama that has hobbled the once red-hot company.
Shares fell as much as 10% on the Hong Kong exchange before rebounding to close to the initial public offering price, leaving the company with a valuation of about $26 billion.
Novartis Pauses Autoimmune Cell Therapy Studies After Deaths
Novartis paused eight clinical trials of an experimental therapy targeting autoimmune and neurological disorders in late August, after three patients died.
The Swiss pharmaceutical company temporarily halted the studies after learning of three fatal cases of a severe immune response, a spokesman said. It wasn't immediately clear when the deaths occurred.
Anthropic Signs $35 Billion Cloud Deal Backed by Nvidia
Anthropic has signed a cloud-computing deal worth $35 billion with Nvidia-backed cloud provider Lambda, with Nvidia itself holding the lease on the data center, according to people familiar with the deal.
The data center is being developed by Hut 8, a bitcoin miner and data-center developer, in Nueces County, Texas. Nvidia signed an agreement with Hut 8 a few weeks ago to secure the capacity, the people said.
Eurozone Inflation Climbs to Near Three-Year High Ahead of ECB Meeting
Eurozone inflation rose for a third straight month in August, reinforcing expectations that the European Central Bank will raise its key interest rate next week for the second time since the outbreak of the war on Iran.
Inflation rose to 3.3% from 2.9% in July, the European Union's statistics agency Eurostat said Tuesday, matching consensus expectations from economists polled by The Wall Street Journal. That marked its highest level since September 2023.
Oil Prices Rise as Renewed U.S.-Iran Fighting Deepens Hormuz Supply Risks
Oil prices rose more than 1% Tuesday as renewed fighting between the U.S. and Iran heightened concerns that disruptions to energy flows through the Strait of Hormuz could persist.
The front-month Brent crude contract rose 1.4% to $91.72 a barrel in European trading, while West Texas Intermediate futures gained 1.6% to $87.10 a barrel.
U.S. Stock Futures Slip Amid Bond Selloff
Global bond yields traded at multiyear highs in early European trade amid growing investor conviction that the U.S. Federal Reserve will raise interest rates at its next policy meeting.
A fresh bout of tit-for-tat attacks between the U.S. and Iran reinforced investors' inflation concerns, adding to rate-hike expectations that had been bolstered by a hawkish tilt by Fed Chairman Kevin Warsh during his Jackson Hole speech last Friday. Markets are now pricing a 67.5% probability of a 25 basis-point rate hike in September, according to LSEG.
Mine Warfare With Iran Hampers U.S. Efforts to Win Control of Hormuz
The U.S. decision to strike Iran for the first time in a month shows Washington's determination to win its cat-and-mouse contest for control over the Strait of Hormuz even at the risk of an escalation that could turn the conflict back into a hot war.
American forces said they hit Iranian launch sites that were preparing to fire rockets used to deploy naval mines in the narrow waters of the strait. In return, Tehran fired a salvo of missiles at Jordan, which is home to thousands of American troops. All were intercepted.
Trump Administration Steps Up Immigration Crackdown on Truck Drivers
Trump administration officials are escalating an immigration crackdown on commercial truck drivers, setting off a new clash with Democratic-led states.
Both the Department of Homeland Security and the Transportation Department are demanding licensing data across the U.S. about immigrants driving trucks, in a hunt for what they say is a rash of drivers with improper certifications.
Washington's Deadly New Headache: an al Qaeda-Houthi Terrorist Alliance
On a balmy evening, Jibril "One-Armed" Yahya Ali and his new bride set out for a honeymoon drive along the beach outside al-Ghaydah, Yemen.
Jibril, a Somali, and his Yemeni wife had met through a mutual acquaintance, an arms dealer who helped Jibril buy military-grade weapons from Yemen's Houthi rebels. Jibril would then smuggle the arms to al-Shabaab, an Islamist insurgent group fighting to overthrow the government in Somalia.
How a Brazilian Billionaire Helped Shape Trump's Beef Import Plan
The Brazilian billionaire who shares control of JBS, the world's largest meatpacker, lobbied President Trump to lower tariffs on beef imports as a way to tame rising U.S. prices.
Joesley Batista met with Trump in the Oval Office on Aug. 20, and they discussed how additional beef supplied from Brazil could help if Trump dropped a 26% import tax, according to people familiar with the matter. It couldn't be learned who organized the meeting between Batista and Trump.
Write to priscila.barrera@wsj.com
TODAY IN CANADA Earnings:
Economic Indicators (ET):
0930 Aug Canada Manufacturing PMI Stocks to Watch:
Anthropic Signs $35 Billion Cloud Deal Backed by Nvidia
CPP Investments Expands Commitment to India's National Investment and Infrastructure Fund; Commits Up to $215M to NIIF Infrastructure Fund II
Hydreight 2Q Revenue CAD 28M; 2Q Adj EBITDA CAD 3.2M; 2Q Net Income CAD 2.5M; Reports 2Q Revenue of CAD 28 Million
Lundin Mining Board Approves Increase of Up to $100M to Share-Repurchase Program for Remainder of 2026
Patagonia Gold 2Q Revenue $4.5M; Reports 2Q Revenue of $4.5 Million
Expected Major Events for Tuesday 00:30/JPN: Aug Japan Manufacturing PMI
05:00/JPN: Aug Consumer Confidence Survey
05:00/JPN: Aug Auto sales
06:00/GER: Jul Retail Trade
06:00/UK: Aug Nationwide House Price Index
06:00/RUS: Aug Russian Manufacturing PMI
07:45/ITA: Aug Italy Manufacturing PMI
07:50/FRA: Aug France Manufacturing PMI
07:55/GER: Aug Germany Manufacturing PMI
08:00/ITA: 2Q GDP
08:30/UK: Jul Bank of England effective interest rates
08:30/UK: Jul Monetary & Financial Statistics
08:30/UK: Jul Money and Credit - Lending to Individuals, Lending to Businesses, Broad Money and Credit
08:30/ITA: Jul Unemployment
08:30/UK: Aug S&P Global UK Manufacturing PMI
08:30/UK: 2Q Household Finance Review
09:00/ITA: Aug Cities CPI
09:00/ITA: Aug Provisional CPI
12:55/US: 08/29 Johnson Redbook Retail Sales Index
13:30/CAN: Aug Canada Manufacturing PMI
13:45/US: Aug US Manufacturing PMI
14:00/US: Aug ISM Report On Business Manufacturing PMI
14:00/US: Jul Construction Spending - Construction Put in Place
14:00/US: Sep RCM/TIPP Economic Optimism Index
14:00/US: Jul Job Openings & Labor Turnover Survey
15:00/US: Aug Global Manufacturing PMI
20:00/US: Aug Domestic Auto Industry Sales
20:30/US: API Weekly Statistical Bulletin
23:50/JPN: Aug Monetary Base
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Expected Earnings for Tuesday Alimentation Couche Tard Inc (ATD.T) is expected to report for 1Q.
AnaptysBio Inc $(ANAB)$ is expected to report $-0.41 for 2Q.
Credo Technology Group Holding Ltd (CRDO) is expected to report $0.91 for 1Q.
Dell Technologies Inc (DELL) is expected to report $4.64 for 2Q.
GitLab Inc (GTLB) is expected to report $-0.18 for 2Q.
Medtronic PLC (MDT) is expected to report $0.99 for 1Q.
Mega Matrix Inc (MPU) is expected to report for 1Q.
MiniMed Group Inc $(MMED)$ is expected to report for 1Q.
MongoDB Inc (MDB) is expected to report $0.06 for 2Q.
Palo Alto Networks Inc (PANW) is expected to report $0.45 for 4Q.
Regis Corp (RGS) is expected to report for 4Q.
Sportsman's Warehouse Holdings Inc (SPWH) is expected to report $-0.16 for 2Q.
Vicarious Surgical Inc (RBOT) is expected to report for 2Q.
Wins Finance Holdings Inc (WINSF) is expected to report for Interim.
Yext Inc $(YEXT)$ is expected to report $0.09 for 2Q.
ZenaTech Inc $(ZENA)$ is expected to report for 2Q.
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ANALYST RATINGS ACTIONS Abercrombie & Fitch Raised to Buy From Hold by Argus Research
Agco Raised to Outperform From Neutral by Baird
Deere & Co Raised to Outperform From Neutral by Baird
Edison International Cut to Neutral From Outperform by Mizuho
Kaiser Aluminum Raised to Buy From Neutral by UBS
PG&E Cut to Equal-Weight From Overweight by Wells Fargo
PG&E Cut to Market Perform From Outperform by BMO Capital
PG&E Cut to Neutral From Outperform by Mizuho
Sempra Cut to Neutral From Outperform by Mizuho
STAG Industrial Raised to Outperform From Neutral by Baird
Strattec Security Cut to Hold From Buy by Freedom Broker
Tenax Therapeutics Cut to Neutral From Buy by Guggenheim
This article is a text version of a Wall Street Journal newsletter published earlier today.