Markets steady as U.S. Iran sanctions fall short of penalties

Global share and bond markets regained calm on Tuesday after the U.S. Treasury Department's sanctions announcement against Iran fell short of imposing immediate penalties, easing fears of an abrupt disruption to energy supplies and global trade. Attention now turns to Nvidia ↗ 0.90% earnings on Wednesday and Federal Reserve Chair Kevin Warsh's debut speech at the Jackson Hole symposium on Friday.

Sanctions Disappoint Hawks, Relieve Markets

U.S. Treasury Secretary Scott Bessent warned countries on Monday to sever financial ties with Iran or face secondary sanctions as part of what had been billed as "economic D-Day," but the Treasury Department stopped short of actually imposing penalties. The softer-than-expected action triggered a modest pullback in oil prices, with Brent crude falling around 1% to $91.40 a barrel on Tuesday, easing from Friday's one-month high.economictimes+2

European shares opened 0.3% higher as defence stocks led gains on expectations the conflict could drag on for months. Germany's 10-year bond yield, the euro zone benchmark, held flat at 3.242%, remaining near last week's 15-year high of 3.275%. French 30-year yields stood at 4.894% after touching an 18-year high on Monday.live.euronext+2

Dollar Struggles, Bitcoin Surges

The dollar edged modestly higher but struggled to build momentum, with the dollar index standing near 99.07 after lifting from three-month lows. Michael Metcalfe, head of global macro strategy at State Street Global Markets, said the simultaneous rise in yields and weakness in the dollar signalled a possible return of "negative bias" toward the greenback. "There is just a kind of concern about the fiscal situation in the U.S. and you are getting this classic dollar weakness and higher yields," he said.globalbankingandfinance+2

Bitcoin ↗ 0.74% crossed $80,000 for the first time since mid-May, pushing its gains over the past 10 days above 30%, fuelled by dollar debasement fears.live.euronext+1

Nvidia and Jackson Hole Loom Large

Markets are now focused on Nvidia's quarterly results on Wednesday, with analysts expecting revenue to nearly double to around $92 billion. Investors also await Warsh's Jackson Hole speech on Friday for clues about the recent surge in bond yields and the Fed's independence from the Trump administration. "Uncertainty over the Fed's reaction function, coupled with growing doubts about its commitment to prioritising inflation, has sharpened attention on Chair Warsh's upcoming remarks," Sim Moh Siong, FX strategist at OCBC, wrote in a note.cnbc+3