Markets entered the new week with caution as investors weighed heightened tensions around Iran and a deepening U.S.-Canada trade standoff. A mix of geopolitical and macroeconomic headwinds kept risk sentiment divided, with technology shares dragging global equities lower and pushing markets into a defensive posture at the start of the week. A slate of major macro events and corporate earnings are scheduled for the days ahead, while falling oil prices offered some relief to bond markets.

As of writing, Dow futures were down 0.09%, S&P 500 futures slipped 0.14%, and Nasdaq futures fell 0.48%. In pre-market trading, chip stocks broadly weakened.

Asian tech names also came under pressure, with major technology heavyweights including Alibaba and SoftBank Group posting notable declines. By contrast, Europe's Stoxx 600 edged up 0.1%, supported by its lower weighting in technology stocks.

The Iran situation remained a central theme. U.S. Treasury Secretary Scott Bessent is expected to hold a press conference later Monday to unveil sanctions against Iran, which so far shows no signs of relinquishing control over the strategic Strait of Hormuz.

Brent crude snapped a six-session winning streak, falling 1.7% to below $93 per barrel. Bessent is set to announce what he has called the "most severe" sanctions on Iran, part of the Trump administration's broader economic pressure campaign, which the White House has described as an "economic D-Day."

Traders are awaiting details of Bessent's plan to economically isolate Iran, the latest U.S. effort to force Tehran to restore normal energy flows through the Strait of Hormuz.

Saxo Bank analysts noted that such measures could further tighten global oil supply, given that Iranian exports have already been disrupted and offers to Chinese buyers have been reduced.

Iran's Supreme National Security Council secretary Mohsen Rezaei warned that any country cooperating with U.S. sanctions would be viewed as committing an act of war against Iran, and that Tehran could block all oil exports through the Persian Gulf if pressure continues. Rezaei also hinted that Tehran might reconsider its non-nuclear stance, accusing Washington of increasing global interest in nuclear weapons.

Weekend shipping data showed fewer than 20 vessels carrying goods through the Strait of Hormuz, though the figure could be revised due to incomplete transponder tracking on some ships. Against this backdrop, oil prices edged lower.

Bessent's Plan May Disappoint Markets

The pullback in oil prices drove U.S. Treasury yields lower across the curve. The 30-year yield remained near 5.2518%, not far from the 19-year high of 5.3371% hit recently.

Traders are positioning ahead of Federal Reserve Chair Kevin Warsh's speech Friday at the Jackson Hole central bank symposium. The address carries added significance after long-term yields surged to multi-decade highs last week on concerns over persistent budget deficits and sticky inflation.

Kathleen Brooks, research director at XTB, said, "This will be a critical week for asset markets, as the Treasury selloff still has the potential to escalate into a full-blown crisis."

The surge in Treasury yields has already prompted Bessent to intervene in the bond market, while he has also pledged measures to improve the U.S. fiscal position. Jesper Fjarstedt, an analyst at Danske Bank, noted that last week's focus was entirely on U.S. Treasuries and Bessent's announcement of expanded long-dated bond buybacks, which briefly lifted the market midweek.

"However, as the market digested the news and concluded that the structural pressure on long-dated Treasuries has not changed, the initial gains were reversed, and long-term yields ultimately closed roughly where they were the prior week," Fjarstedt added.

Emma Moriarty of CG Asset Management said that given the scale of fiscal consolidation the U.S. needs, Bessent's plan is "likely to disappoint the market."

Eurozone government bond yields also declined in early trading. According to Tradeweb, the German 10-year yield fell 2.4 basis points to 2.324%.

Belgium is set to hold a bond auction on Monday. Ireland's 10-year yield dropped 2.2 basis points to 3.388%, following Moody's upgrade of Ireland's sovereign rating from Aa3 to Aa2 with a positive outlook on Friday.

Warsh's Speech May Offer Few Surprises

As for Warsh, the market remains uncertain about his signal. On one hand, he has been reluctant to provide clear policy guidance; on the other, market participants believe Bessent's bond market intervention has already encroached on territory traditionally belonging to the Fed chair.

Bruce Kasman, chief economist at JPMorgan, said, "There are several reasons to think this speech may not bring many surprises." He noted that past Fed chairs have typically avoided pre-announcing policy decisions at Jackson Hole.

Kasman added, "Warsh is more likely to focus on his 'institutional reform' agenda. Given that the Fed is already moving toward shrinking its balance sheet and the July meeting minutes discussed this, it's probably the most likely topic he will elaborate on."

Market pricing currently implies roughly a 40% probability of a rate hike at the Fed's September 16 meeting, while a full rate increase by December is already priced in.

That probability could shift with this week's U.S. inflation data. The market expects core inflation to hold at a median of 3.3% for July.

Warsh will almost certainly also be questioned about Bessent's surprise Treasury buyback announcement last week. Bessent said he would at least double the scale of bond repurchases to curb rising yields, which are tightening financial conditions for the U.S. economy. So far, however, these measures have had limited effect.

Meanwhile, the Fed's preferred inflation gauge will be released Wednesday, a data point that could influence near-term rate expectations. Some Fed officials have again expressed concerns about persistent inflationary pressures.

NVIDIA Earnings on Deck

AI bellwether NVIDIA will also report earnings Wednesday. Options markets currently imply a potential move of about 4.6% in the stock following the release.

Investors are aware that with expectations already elevated, it won't be easy for NVIDIA to beat estimates again. NVIDIA is not only the core pillar of global AI infrastructure buildout but is also increasingly involved in financing AI projects.

Brooks commented, "NVIDIA has become so powerful and cash-rich that it's almost like a central bank for the tech industry."

Mark Ellis, chief investment officer at Nutshell Asset Management, said, "The biggest news this week will be NVIDIA's earnings... its tone could influence Nasdaq sentiment."

Analysts broadly expect NVIDIA's quarterly revenue to nearly double to around $92 billion, with full-year earnings guidance projected between $103 billion and $105 billion.

U.S.-Canada Trade War Risks Intensify

The dollar edged higher, with the dollar index up 0.2% to 98.983, after hitting a three-month low of 98.557 on Thursday. The euro slipped 0.1% against the dollar to 1.16655, following a 0.9% weekly gain last week.

Bloomberg strategist David Savage said that as investors re-embrace the "dollar depreciation trade," global equities could see a rebound this week driven by multiple major catalysts, including NVIDIA's earnings, the core PCE reading, and the Jackson Hole symposium.

Volkmar Baur, an analyst at Commerzbank, said, "The dollar's reaction may depend on the scope and severity of the sanctions." He noted that if multiple countries with economic ties to Iran are also affected, the dollar could actually weaken.

U.S.-Canada trade relations are showing further signs of a prolonged freeze. The dollar gapped higher against the Canadian dollar in early Asian trading, reflecting growing pessimism about a near-term resolution to the trade dispute.

Canada's negotiating team believes the likelihood of resuming talks before the U.S. midterm elections is low and is preparing a domestic aid package to support businesses through a prolonged trade conflict, with measures potentially extending beyond the end of Trump's term. U.S. Trade Representative Jamieson Greer said it is difficult to determine when talks might resume and confirmed no new negotiations are scheduled, broadly aligning with Ottawa's lowered expectations.

Gold Tops 4650

Bitcoin pulled back slightly but remained at elevated levels, below the three-month high hit on Friday.

Gold was volatile during the day but ultimately rose to a three-month high, briefly breaking above $4,650, bringing its monthly gain to roughly 15%. As geopolitical risks and macroeconomic uncertainties continue to accumulate, some capital has shifted into gold as a safe haven.

Saxo Bank analysts said, "The Treasury's unexpected expansion of long-dated bond buybacks has rekindled concerns about dollar weakness and pushed investors toward alternative assets."

Stocks to Watch

Alibaba fell 2% after announcing a share placement to raise capital. The company said all proceeds would be directed toward AI projects, with a focus on AI infrastructure.

The iShares Semiconductor ETF, which fell 5.5% last week, dropped nearly another 2% on Monday. Marvell Technology fell close to 3.5%, while AMD and Intel each slipped about 2%.

Multiple memory-chip makers weakened in pre-market trading. SanDisk dropped over 5%, Western Digital and Seagate Technology fell nearly 4%, and Micron Technology slid 3.5%.

Following the breakdown of U.S.-Canada trade talks, two steelmakers rose. Nucor surged over 4%, and Dynamic Steel advanced 3.5%. Canada is set to implement retaliatory tariffs on September 8, with the U.S. steel industry expected to be a key target.

After three consecutive days of gains, bitcoin traded sideways around $77,000 over the weekend. During the crypto rally, trading platform Robinhood accumulated gains of over 18% but fell 1% in pre-market trading; Coinbase rose over 27% in the same period but also declined 1% pre-market.

Several Wall Street firms initiated coverage on JMKE (Jimmy John's sandwich chain) with buy ratings, sending the sandwich chain operator's shares up 0.5%. Analysts generally believe the stock is undervalued with significant upside potential.