Deutsche Bank’s Jim Reid notes that global equities ended August on a softer footing as escalating US-Iran tensions and a hawkish Jackson Hole speech from Fed Chair Warsh weighed on risk sentiment. The S&P 500 and Stoxx 600 declined on Monday, while tech stocks proved relatively resilient as semiconductor shares stabilized. The cautious tone carried into Asian markets overnight, with most major indices trading modestly lower.

Higher yields pressure US equities

“Markets finished August on a softer note with equities and bonds weighed down on Monday by the weekend escalation between the US and Iran, having also lost ground last Friday following a hawkish speech from Fed Chair Warsh at Jackson Hole.”

“Monday’s challenging geopolitical backdrop weighed on equities on both sides of the Atlantic, with the S&P 500 falling -0.33% after a -0.36% decline Friday, while Europe’s Stoxx 600 slumped by -0.62% (after +0.51% Friday).”

“Tech stocks saw a slightly better performance yesterday, with the Nasdaq down -0.12% after -0.52% Friday, which was thanks to a stabilization in the Philly semiconductor index (+0.57%) after its -3.47% slump on Friday. Remaining tech earnings this week include Palo Alto Networks and Dell today, as well as Broadcom and Snowflake tomorrow.”

“Cautious risk sentiment has largely carried over into Asian markets overnight with major indices posting modest declines. As I check my screens, the Hang Seng (-1.00%) is the biggest underperformer while the KOSPI (-0.08%), Nikkei (-0.26%), the CSI 300 (-0.06%) and the S&P/ASX 200 (-0.32%) are all trading slightly in the red as well.”