Fed chair Kevin Warsh has the market’s full attention

Source: Bloomberg

Middle East

For the pessimists, Washington escalated pressure by unveiling what Treasury Secretary Scott Bessent described as an "economic D-Day" on Iran, raising the risk of tougher secondary sanctions on countries and companies doing business with the country. It has been officially designated Operation Economic Outcast by the US Treasury. Tehran responded with warnings over shipping through the Strait of Hormuz. Shipping traffic through the economically significant waterway remained well below pre-conflict levels. 

For the optimists, hopes of a de-escalation increased after Iran and Oman advanced discussions on a framework to secure navigation through the strait, helping oil prices retreat from recent highs despite continued geopolitical uncertainty. For markets, the crisis remains primarily an energy story, with any disruption to Hormuz threatening higher oil prices, renewed inflation pressures and increased volatility across global equities and bond markets.

Other geopolitics

US-Canada trade tensions flared sharply after negotiations between Washington and Ottawa broke down, allowing US tariffs of 50% on roughly $20bn of Canadian goods to take effect. The duties, imposed under a rarely used provision of US trade law, target a range of products including consumer goods, food and industrial materials, with the Trump administration citing what it regards as discriminatory Canadian trade practices. 

A last-minute three-day delay briefly raised hopes of a breakthrough, and Trump initially claimed the two sides had reached a deal, but talks subsequently collapsed, prompting Canadian Prime Minister Mark Carney to suspend negotiations and pledge dollar-for-dollar retaliation. Market participants appear to consider the confrontation a negotiating tactic, as experience supports this view. The base case continues to expect both sides to return to the bargaining table, however this does carry a large degree of risk.

Economics

The Federal Reserve is now seen as more likely to raise interest rates following an important inflation data release ahead of the Jackson Hole symposium of central bankers, which gets into gear on Friday. The Personal Consumption Expenditures (PCE) Price Index, which the Fed uses to set its inflation target, increased 3.7% in the 12 months to the end of July, the Commerce Department’s ⁠Bureau of Economic Analysis said on Wednesday. A consensus view stood at 3.6%.

Confidence in the US economy declined again in August as gasoline prices rose above $4 per gallon. Due to the ongoing Middle East conflict. The Conference Board said its consumer confidence index dipped to 89.4 in August from 90.2 in July. That was the lowest level in seven months but was essentially within the same tepid range it has been in since the beginning of the year. 

Companies

Nvidia delivered another blockbuster set of results, reinforcing its position at the centre of the AI boom. Second-quarter revenue more than doubled year-on-year to a record $96.2bn, while adjusted earnings per share rose to $2.22, both comfortably ahead of analysts' expectations. The data centre business remained the key growth engine, with revenue surging 117% to $89bn as demand for AI infrastructure continued to accelerate, while chief executive Jensen Huang said the global AI buildout was running at "full steam". Investors were also encouraged by guidance for third-quarter revenue of around $108bn, ahead of Wall Street forecasts, and management's upbeat outlook for growth. Nvidia shares rose about 4% in after-hours trading following the release, as the results eased concerns that spending on AI infrastructure might be slowing and reinforced confidence that the company can maintain its extraordinary growth trajectory.

Synopsys delivered a strong third‑quarter performance, with revenue climbing 42% year‑on‑year to $2.48bn, comfortably ahead of analyst expectations. Management raised full‑year guidance, citing sustained AI‑driven demand for advanced chip‑design tools and verification hardware. The company also highlighted improving margins and early cost synergies from its Ansys acquisition alongside a strengthened balance sheet after repaying a $4.3bn term loan. 

Prudential increased its share buyback after an upturn in new business delivered higher profits in the first half of the year. A strong performance in Hong Kong, Malaysia and Singapore boosted pre-tax profits by 10% to $1.8bn. 

Danish group Lego reported a 21% revenue jump in the first half of 2026 to a new record. Results were boosted by its product lines such as botanical bouquets, Formula 1 race cars and collectible sets.

Zoom shares fell following its second quarter figures, despite beating Wall Street earnings forecasts. Markets were disappointed by its third-quarter guidance, which came in below Wall Street expectations. 

Shares in US retailer Abercrombie & Fitch soared after the company reported second-quarter earnings and a profit outlook above market expectations.