Shares flat in Asia before Iran sanctions news, Nvidia results

Asian equity markets opened relatively calm on Monday, with the Nikkei index hovering near flat after a 4% drop the previous week, and South Korean and Taiwanese shares experiencing a slight decline. Investors were keeping a close eye on the threat of potential US sanctions on Iran, which were expected later in the day. Meanwhile, the Canadian dollar saw a dip as a looming trade war with its southern neighbor loomed.

The tech sector remained on edge ahead of Nvidia's results on Wednesday, as investors anticipated the challenge of meeting lofty expectations for the chip maker. Analysts were focusing on revenue projections, with many predicting a nearly double increase to approximately $92 billion for the quarter, with full-year guidance clambering between $103 billion and $105 billion.

Additionally, the Federal Reserve's upcoming decision on interest rates, as well as insights from Federal Reserve Chairman Kevin Warsh, were topics of interest, though Warsh's hesitance to provide forward guidance may result in disappointment. Analysts agreed that there were significant reasons to expect underwhelming results, noting that Fed chairmen often avoid giving guidance at the Jackson Hole event.

Warsh was likely to emphasize aspects of his "regime change" agenda, potentially focusing on the Federal Reserve's balance sheet management. The odds of an interest rate hike were estimated at around 40%, with markets already pricing in a potential move by December. The Federal Reserve's past progress in reducing its balance sheet and its attention during the July minutes indicated that such a move might be the primary focus.

If the inflation figures released this week were as expected, core inflation was projected to remain at 3.3% for July. Warsh would also be questioned about the recent doubling in bond buybacks by US Treasury Secretary Scott Besse, which aimed to counteract rising yields and the tightening of financial conditions. However, these efforts had yielded limited success, with 30-year yields remaining at 5.2760%, close to the 19-year peak of 5.3371%.

The underwhelming bond market performance highlighted the strain placed on valuations by rising yields. The sanctions on Iran and the looming trade war were also on investors' minds, with Iranian sanctions expected to be outlined in a news conference by US Treasury Secretary Besse on Monday. Iran had shown no signs of relenting in its control over the Strait of Hormuz, and Brent crude oil prices slipped 1.0% to $93.43, following a 6.6% increase the previous week.

US crude oil, on the other hand, eased 1.1% to $86.14 per barrel. Overall, Asian markets remained relatively stagnant early in the session, with major indices such as the Nikkei near flat, South Korean shares down 0.8%, and Taiwan shares slipping 0.5%. In Europe, major indices such as the EURO STOXX 50, DAX, and FTSE were all essentially unchanged.

On Wall Street, S&P 500 and Nasdaq futures struggled, registering a slight decline. In currency markets, the US dollar experienced a slight gain against the Canadian dollar, reaching 1.3784, following Prime Minister Mark Carney's announcement that Canada would retaliate to US tariffs with tariffs of its own amid the breakdown of trade talks.

The dollar was under pressure in other markets as investors grew concerned about mounting US debt and policy uncertainties, which could weaken the currency's purchasing power and drive demand for scarcer assets like gold. Gold prices rose 0.4% to $4,623 per ounce, after surging over 14% during the month. If the upward trend continued throughout August, it would mark the largest monthly increase on record.