Wall Street delivered a split verdict on Monday, with the tech-heavy Nasdaq Composite sliding 0.76% to 25,980.19 and the S&P 500 shedding 0.28% to 7,652.86, while the blue-chip Dow Jones Industrial Average edged up 0.26% to 53,417.16. The bifurcation reflected a sharp rotation out of technology — which fell 1.6% on the session — and into financials, utilities and consumer staples, each of which gained more than 1%. Eight of the eleven S&P 500 sectors finished in the green, underscoring that the weakness was narrowly concentrated in semiconductors and memory stocks.

The epicentre of the selloff was the memory chip complex. Reports over the weekend that the Trump administration was weighing a policy change to allow Apple to procure DRAM from China’s CXMT and NAND flash from YMTC sent shockwaves through the space: Seagate, SanDisk and Micron all fell roughly 6%, while Nvidia dropped 2.9% for its seventh straight daily decline — the longest losing streak since 2022. The Philadelphia Semiconductor Index tumbled nearly 3%. Separately, Samsung’s shareholder return program missed expectations, sending its Korean-listed shares down nearly 9% and dragging the KOSPI down 3%. Political opposition to AI data centres also weighed, with Texas Governor Greg Abbott pausing new data centre approvals and warning companies “dug their own grave” by failing to win community support.

“Nvidia needs to impress in order to keep one leg of the stock market stable, and Warsh needs to provide clarity on interest rates in order to keep the other leg stable,” said Richard Reyle, chief investment officer at Questar Capital Partners. On the positive side, financials rallied with JPMorgan up 1.4% and Visa adding 3%, while Expedia surged 5.5% and Walmart gained 2.7%. Volume on US exchanges was 14.36 billion shares, below the 16.5 billion 20-day average, suggesting conviction remains low ahead of a pivotal week of catalysts.

Nvidia posts its longest losing streak since 2022, falling for seven straight sessions ahead of Wednesday’s earnings. Source: Bloomberg.

Global stock indices — daily and 5-day performance. The Dow is the standout in the US, while Asian markets led losses on the KOSPI’s 2.86% plunge.

Trade tensions between the US and Canada escalated sharply after discussions to reach a deal collapsed over the weekend. New 50% tariffs on $20 billion of Canadian imports came into effect on Saturday, and President Trump doubled down on Monday, pledging that tariffs on “all cars, trucks, automotive parts, and steel” from Canada would rise to 50% from January 1, 2027. The US Trade Representative cited “new demands and walkbacks” by Canada for the breakdown. Automakers Ford and General Motors fell 3.3% and 1.1% respectively, while trucking firm J.B. Hunt dropped 5.7%.

Canada is not backing down. Prime Minister Mark Carney announced retaliatory tariffs effective September 8, pledging to “match the US’s new tariffs dollar for dollar in order to protect Canadian workers, farmers, families, and businesses.” Canada was Washington’s second-biggest trading partner in June, accounting for 12.9% of total trade, making this a confrontation with significant economic consequences for both sides. The Canadian dollar slid against the greenback, the biggest G10 loser on the session with USD/CAD up 0.6%.

Meanwhile, Washington launched what it called “Operation Economic Outcast” against Iran. Treasury Secretary Scott Bessent told reporters the US had “mapped every node, every facilitator, and every network” Iran uses for obtaining oil and keeping its economy running, with the Office of Foreign Assets Control sanctioning over 60 entities. When asked about potential sanctions against Chinese banks — China being one of Iran’s biggest oil importers — Bessent warned: “We want to make clear that no one is above the reach of US sanctions.”

Oil prices pulled back on Monday, snapping a near-two-week winning streak, as the Iran sanctions campaign paradoxically weighed on crude. West Texas Intermediate fell 2.4% to $84.98 a barrel and Brent crude dropped 2.5% to $90.36 — only the second decline in 14 sessions. Morgan Stanley’s Michael Wilson wrote that “crude is the near-term risk — and it’s asymmetric,” noting Brent has climbed 13% over the past two weeks and recommending energy stocks as the most effective portfolio hedge. The bank quantified the asymmetry, finding the oil-versus-equity beta is twice as material in a rising Brent tape as in a falling one.

Gold continued its strong run, rising 1% to $4,651.35 an ounce with futures gaining 0.6% to $4,708.41, both hovering near their highest levels since mid-May. Jefferies noted that inflows into gold-backed ETFs surged to more than $4 billion last week. The debasement trade — investors moving capital out of fiat currencies and into hard assets amid fiscal scepticism — is driving both gold and crypto higher. Bitcoin rose 1.7% to $78,696, coming within a whisker of $80,000 for the first time since mid-May after its best week in over three years (+22.6%). Strategy’s MSTR sold $2 billion in shares but made no Bitcoin purchases, holding 840,447 BTC worth approximately $65.8 billion.

In fixed income, the 10-year Treasury yield fell 4 basis points to 4.70% and the curve flattened as CNBC reported the Treasury could use its near $1 trillion TGA to fund expanded buybacks of long-dated bonds. The dollar rose 0.2% for its best day in two weeks, with the Bloomberg Dollar Spot Index firming. The euro slipped 0.1% to $1.1663 and the yen fell 0.1% to ¥159.15 per dollar. Peter Schiff of Euro Pacific Asset Management warned the TGA plan was “a recipe for massive QE and runaway inflation,” while Citadel Securities called the Treasury’s efforts “financial repression” that risks weakening the dollar.

The Treasury General Account balance stood at $935 billion as of 20 August — CNBC reports it could be used to fund bond buybacks. Source: US Treasury Department.

Commodities, energy & FX — daily and 5-day performance. Bitcoin dominates with a 22.29% 5-day gain; platinum +9.94% and silver +8.81% on the week. Crude the only red 5-day reading at −1.92%.

The fixed-income market remained in the spotlight as Treasury Secretary Bessent’s expanding intervention toolkit drew both relief and scepticism. Last week’s surprise announcement to at least double buybacks of 10- to 30-year securities from September 9 initially rallied bonds, but much of the move was unwound on Thursday and Friday. On Monday, CNBC reported that two senior Treasury officials confirmed the department was considering tapping the $935 billion TGA to fund buybacks instead of issuing more short-term bills, a move that would avoid replacing one type of debt with another.

Bessent himself was cautious on Monday, telling reporters “we haven’t bought a single bond yet” and indicating no changes ahead of the November quarterly refunding announcement. Morgan Stanley estimates the Treasury might have $80 billion to $200 billion in “excess” cash for bigger buybacks. However, RBC’s Blake Gwinn called it “a very slapdash attempt to stem the selloff” and rated the chance of using cash as “very, very low.” The 30-year yield remains above the psychologically significant 5% threshold despite falling 5 basis points on the session.

Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management, highlighted the fiscal backdrop: “Gross US government debt has surpassed $40 trillion and net interest payments have risen to more than $931 billion during the first 10 months of the current fiscal year.” With the Fed expected to raise rather than lower rates, concerns are growing about the implications for both the economy and financial markets. All eyes now turn to Fed Chair Warsh’s Jackson Hole keynote on Friday, where investors will scrutinise whether he provides any forward guidance despite his well-publicised preference for less communication.

The Australian sharemarket rallied on Monday, with the S&P/ASX 200 rising 48.9 points or 0.6% to 9,107.8, driven by a surge in mining stocks. BHP hit a record high of $67.72, taking its year-to-date gains to 48%, underpinned by strong demand for copper and uranium. However, the index remains well below its record high of 9,296.70 set earlier this month and has fallen for two consecutive weeks. The Australian dollar traded at US71.63¢, pulling back slightly from Friday’s near three-month high at US71.80¢.

It is the final week of earnings season, with more profit downgrades expected amid a challenging economic backdrop following three rate rises this year. Woodside Energy posted a 7% increase in first-half underlying net profit to US$1.33 billion on 13% higher sales, and announced an annual cost savings target of US$350 million from 2028, while declaring an interim dividend of US57¢ per share at an 80% payout ratio. In other corporate news, Regal Partners fell after co-founder Phil King announced his retirement, EVT surged 9% on a planned sale of $800 million in non-core assets, and Ampol climbed 4.3% to a two-year high as first-half profit surged nearly fivefold on higher oil prices.