Morning Market Brief – 2026-08-03

Good morning. We are entering a new week with markets dominated by sudden plot twists on the geopolitical front, triggering massive volatility in the commodities market. On one hand, investors are digesting a sharp resurgence of tensions between the US and Iran; on the other, rising US Treasury yields are beginning to weigh on global equity markets. Additionally, signals of a clear slowdown in the Chinese economy are reaching us, forcing its central bank into verbal interventions.

Geopolitical Environment

• Fragile truce and sudden escalation. The turn of the week brought a real rollercoaster to the oil market. Initially, following news of a halt in mutual attacks between the US and Iran, crude prices dropped sharply (Brent crude declined by 6–9%, dropping to the $82–90 per barrel range). This relief fueled strong gains on European stock exchanges (Stoxx 600, DAX), among others.
• End of the pause hits the market. However, the situation turned dramatically when US President Donald Trump announced the end of the truce agreement. The resumption of US strikes on targets in Iran caused an immediate increase in oil prices of over $1 per barrel in after-hours trading. This triggered a broad risk-off sentiment across global equity markets, pushing futures on the tech-heavy Nasdaq index to multi-week lows, among others. (Sources: Reuters; Yahoo Finance; Gulf News).
• Russian diesel export ban. Against the backdrop of global oil turmoil, Russia introduced a ban on diesel exports. This is a response to the growing domestic fuel crisis, resulting partly from damage to Russian refineries caused by Ukrainian drone attacks. (Source: Financial Times).

Today's Highlights

• Hawkish Fed drives yields to 2007 levels. As mentioned over the weekend, the Federal Reserve led by Kevin Warsh kept interest rates unchanged in the 3.5–3.75% range, but as many as three committee members demanded a rate hike. The debt market reacted sharply. The yield on 30-year US Treasuries broke through the 5.2% level, reaching its highest values since 2007. Such a high cost of long-term money in the US poses a significant burden on the government, but also formidable competition for equity markets (investors are more inclined to move capital into safe, high-yielding bonds). (Sources: New York Times; Wall Street Journal; Barron’s).
• Historic yen weakness and pressure in Japan. The Japanese currency reached 40-year lows in recent days (USD/JPY around 162–164), prompting Japanese authorities to intervene once again by buying up the yen. Interestingly, US Treasury Secretary Scott Bessent publicly backed these actions, calling the yen "significantly undervalued" and excessive volatility "unhealthy." Although there is no evidence that this was a formally coordinated joint operation with the US government, the market views it as strong political backing for Tokyo. At the same time, the benchmark 10-year Japanese Government Bond (JGB) yield rose to its highest level in nearly 30 years due to concerns over persistent inflation and the country's fiscal health. (Sources: Reuters; The Straits Times; Scanx.trade).
• OPEC+ ends production cuts. According to the latest reports, key members of the OPEC+ cartel approved the final increase in production limits at Friday's meeting (August 2). Starting in September, supply will increase by approximately 188,000 barrels per day. This decision formally concludes the long process of phasing out voluntary production cuts (of 1.65 million barrels per day) that were introduced back in 2023. (Sources: Investing.com; OilPrice.com).
• Chinese economic slowdown confirmed by data. The official Manufacturing PMI (Purchasing Managers' Index) for China dropped to 49.2 points in July (down from 50.3 points in June), while for the non-manufacturing sector (services and construction), it declined to 49.0 points. As a reminder: a reading below 50 points indicates sector contraction. In response to these concerning figures, the People's Bank of China (PBOC) announced it would maintain an accommodative monetary policy stance and ensure ample liquidity in the financial system. (Sources: JRJ.com.cn; Straits Times; Fibre2Fashion).

Market Background

• Prysmian acquires Atkore. A major deal was struck in the industrial M&A (mergers and acquisitions) market. Italy's Prysmian will acquire Atkore in an all-cash deal, paying $95 per share. This values the US company at approximately $3.8 billion. The boards of both companies expect significant synergies from the merger, and the price includes a substantial premium over Atkore's historical stock valuations. (Sources: Reuters; Prysmian Group and Atkore Inc press releases).
• Bank of England also pauses. Notably, amid the wave of central bank decisions, the UK's Bank of England (BoE) kept its benchmark interest rate unchanged at 3.75%. Much like in the US, this was not a unanimous decision—a growing number of hawkish voices are demanding rate hikes due to persistent underlying inflation. (Sources: Bloomberg; InvestingLive).
• Emergency relief for French farmers. The French government announced a support package for the agricultural sector. It includes subsidies for fertilizer purchases and support for domestic production. This comes as a response to the difficult plight of farmers struggling with high energy costs, extreme weather conditions, and low grain procurement prices. (Source: Reuters).

Key Events to Watch

This week, market attention will focus on US economic activity data and Friday's key labor market report.

• 08/03 (Today) – China: Caixin Manufacturing PMI. A private indicator the market pays close attention to following weak official data.
• 08/03 (Today) – US: ISM Manufacturing Index (4:00 PM). A primary barometer of US manufacturers' sentiment, providing key cues ahead of employment data.
• 08/04 (Tuesday) – US: JOLTS Job Openings Report (4:00 PM). An indicator of labor demand, closely monitored by the Fed for wage pressure.
• 08/05 (Wednesday) – US: ISM Services Index (4:00 PM) and ADP Employment Report (2:15 PM). The service sector is the cornerstone of US GDP, while the ADP report offers a preview of Friday's labor market figures.
• 08/07 (Friday) – US: NFP Labor Market Report (2:30 PM). The week's top macroeconomic event. Job growth and the unemployment rate will directly dictate market expectations regarding the Federal Reserve's upcoming decisions.