Tuesday, August 25

The United States unveiled its most expansive Iran sanctions package to date, targeting roughly 60 entities, individuals and vessels across digital assets, technology, gold, aviation and shipping. Treasury Secretary Scott Bessent described the campaign as an effort to sever every economic lifeline supporting Tehran, including networks tied to its nuclear, missile, cyber and oil operations.

The immediate market impact was less severe than feared because the measures stopped short of sanctioning Chinese institutions or directly disrupting China’s role as Iran’s principal oil buyer. That helped equities absorb the announcement, even as Iran threatened retaliation and Gulf energy chokepoints remained a tail risk. The package is therefore a pressure escalation, not yet a global supply shock—but Bessent’s warning that a major financial institution, potentially in China, could be targeted later keeps the risk of a sharper dollar-funding and oil-market reaction alive.

Trade policy added a second layer of pressure: Canada announced 15–50% retaliatory tariffs on about $20 billion of U.S. goods after Washington imposed 50% tariffs, while planned U.S. auto, steel and China tariffs point to further supply-chain fragmentation.

U.S. equities edged higher into Nvidia’s Wednesday earnings report, with the S&P 500 up 0.32%, the Dow up 0.30% and the Nasdaq up 0.66%. The advance followed a sharper technology-led pullback in which the Nasdaq 100 fell nearly 1%, underscoring that recent gains remain concentrated in the largest AI beneficiaries rather than broadly distributed across the market.

Nvidia’s report is the week’s central test of whether AI-related capital spending can continue to justify elevated mega-cap valuations. The market added roughly $3.5 trillion in tech-led capitalization during the recent rally, leaving index futures modestly lower in premarket trading as traders consolidated ahead of the print. The concentration is visible beyond Nvidia: Navitas Semiconductor jumped nearly 7% after agreeing to acquire Claros, a power-management company focused on vertical power delivery and integrated voltage regulation for AI data centers.

Weakness in smaller growth names remains a counterpoint. Gorilla Technology plunged almost 10% after missing first-half EPS estimates, while Longeveron dropped 11.6% after announcing a 1-for-10 reverse split. The contrast reinforces the market’s dependence on a narrow, profitable AI complex.

Australia’s July inflation data delivered the clearest macro surprise: headline CPI rose 3.8% year over year against a 3.2% consensus, while the RBA’s trimmed-mean measure reached 3.6%, slightly above expectations. The monthly headline decline to -0.1% from 0.8% offers evidence of short-term disinflation, but the annual and core readings keep the “higher for longer” interpretation intact and constrain the Reserve Bank of Australia’s room to ease quickly.

In the United States, attention shifted to the upcoming GDP second estimate, Core PCE, durable-goods orders and Chicago PMI. Markets are pricing roughly a 40% probability of a September Fed hike, making the data cluster and Fed Chair Kevin Warsh’s Jackson Hole speech important tests of that pricing. The 10-year Treasury yield remained near 4.64–4.67%, with the two-year around 4.22%, as falling crude and discussion of larger Treasury buybacks eased long-end pressure.

Brent’s roughly 3.9% decline to about $88.60 also helped temper inflation expectations, but gold’s continued strength and a modestly firmer dollar show that geopolitical hedging is offsetting some of the disinflationary benefit.