Global markets started the week on a cautious footing, with Asian stocks falling and Treasuries gaining as investors turned their attention to key technology earnings, Federal Reserve signals and the upcoming Jackson Hole gathering. The AI trade came under pressure, while lower oil prices provided some support for bonds.

MSCI’s Asia Pacific equity gauge fell almost 1%, with Samsung and Alibaba among the biggest contributors to the decline. Samsung shares dropped 8.7% in Seoul after investors were underwhelmed by the company’s plans to return as much as 110 trillion won, or around $80 billion, to shareholders. Alibaba fell 9.8% in Hong Kong after announcing plans to raise HK$80 billion, equivalent to around $10.2 billion, through a share sale.

SoftBank also came under pressure, falling 4.6% in Tokyo after announcing plans for a record ¥1 trillion, or approximately $6.3 billion, retail bond offering. European and US equity futures pointed to modest losses, reflecting a more defensive tone as investors await key developments across the technology and monetary-policy landscape.

Treasuries advanced ahead of Treasury Secretary Scott Bessent’s expected announcement on fiscal consolidation. Falling oil prices also supported the bond market, with Brent crude declining 1.3% to around $93.15 a barrel. The US 10-year Treasury yield eased 2 basis points to 4.71%, while yields in Australia and New Zealand also moved lower.

The Dollar remained under pressure as hedge funds increased bearish positions while waiting for further details of Bessent’s fiscal plan, particularly as concerns surrounding elevated US borrowing costs and fiscal sustainability continue to influence market sentiment. Gold extended last week’s gains, trading around $4,640 an ounce and remaining close to a three-month high as investors sought alternatives amid concerns over the Dollar and US fiscal outlook.

The Canadian Dollar weakened after trade talks between Canada and the US collapsed late Friday, with Washington imposing a 50% tariff on around $20 billion of Canadian goods. Prime Minister Mark Carney said Canada would respond with counter-tariffs on $20 billion of US products from September 8, increasing concerns over another escalation in the North American trade dispute.

In energy markets, oil extended its decline after two weeks of gains as investors awaited the US economic isolation plan for Iran, expected later Monday. The outlook for crude remains closely tied to geopolitical developments and the potential impact of further restrictions on Iran’s economy and energy exports.

In Japan, attention is increasingly turning toward the Bank of Japan as officials prepare for several opportunities to respond to growing market expectations for a September rate hike. A key speech on Thursday could provide investors with further clues on whether policymakers are comfortable with the recent repricing of the monetary-policy outlook.

Markets will also closely watch Jackson Hole this week, with investors focusing on Kevin Warsh’s speech for clues about the Federal Reserve’s response to persistent inflation and fiscal concerns. The message from the Fed could prove particularly important for long-duration Treasuries, where another selloff remains a key risk if policymakers signal limited room for monetary easing.

Elsewhere in the technology sector, TSMC is reportedly set to manufacture Xiaomi’s Xring chip, highlighting the continued expansion of semiconductor production and competition within the AI and advanced-chip ecosystem.

Meanwhile, tensions around the Strait of Hormuz remain elevated. The Persian Gulf Strait Authority warned that vessels violating Iran’s rules for passing through the Strait of Hormuz could face fines, detention or confiscation, adding another layer of geopolitical risk for global energy markets and shipping.

In geopolitical developments, authorities reported that people were killed and two others injured following a Ukrainian drone strike on Russia’s Belgorod region, underscoring the continued security risks surrounding the Russia-Ukraine conflict.

Overall, markets began the week with a defensive tone as investors reduced exposure to equities and favored Treasuries amid uncertainty surrounding the AI trade, US fiscal policy and monetary-policy expectations. With Jackson Hole, key technology developments, trade tensions and geopolitical risks all in focus, volatility could remain elevated across equities, bonds, currencies and commodities.

FISG Daily Market Wrap provides a concise view of the forces moving global markets, helping investors stay informed and better prepared for what comes next.

FISG — Interstellar Group