What moved
US futures are pointing lower into the bell: S&P 500 futures are down 0.36% and Nasdaq 100 futures 0.30%, after a Friday session that closed the S&P 500 down 0.25% at 7,711.76, the Nasdaq Composite down 0.52% and the Dow essentially flat at -0.02%.
Europe is mid-session and split: the DAX is the weakest of the majors at -0.71%, the CAC 40 is up 0.17% and the Euro Stoxx 50 down 0.17%. London is shut for the summer bank holiday, leaving the FTSE 100 at Friday's 10,824.26. Asia finished mixed — the Nikkei 225 ended down 0.14% and the Hang Seng down 0.07%, while the Shanghai Composite closed 0.86% higher.
Why
The weekend changed the risk backdrop. US forces struck Iranian rocket launchers on the Strait of Hormuz after spotting preparations to fire sea mines into the waterway, the first American military action there in weeks, and Tehran has vowed to retaliate. Roughly a fifth of the world's seaborne oil normally passes through the strait, so the threat premium goes straight into crude: WTI is up 3.08% at $85.97, with Brent at $88.38.
That lands on a rates market already repricing in one direction. Fed chair Kevin Warsh used Jackson Hole on Friday to argue that the summer's better inflation prints do not show underlying trends improving, and futures now put a September rate rise at close to 60%, against roughly 35% before he spoke. A hawkish Fed plus dearer energy is a poor combination for long-duration equities, and it shows in the curve: the 10-year Treasury yield is 2.8 basis points higher at 4.748% and the 30-year up 4.0 basis points at 5.246%. Higher long yields raise the discount applied to distant profits, which is why the Nasdaq is underperforming rather than the Dow.
Europe has its own version of the same problem. German flash harmonised inflation for August came in at 2.9% year on year — slightly softer than expected but above July's 2.8%, with energy prices up 10.5% on the year. China was the exception: Shanghai closed higher despite official August PMIs staying in contraction, helped by fresh measures to support the property market.
Sentiment & risk appetite
This is a nervous tape rather than a frightened one. The VIX is up 6.51% at 15.37 — a big one-day percentage move from a low base, and still 56% below its 52-week high. Friday's breadth was clearly negative: across PrimerIQ's US universe 2,199 names rose against 3,582 that fell, an advance-decline ratio of 0.61, with a mean move of -0.63%. Dispersion did the talking, with technology sectors down 1.55% on the day against communication services up 1.42%, and our US healthcare median at -1.73%.
The haven bid is notably half-hearted for a day with a Middle East escalation on it. Gold is up just 0.27% at $4,490 and the dollar index is slightly softer at 99.573, while Treasuries are selling off rather than rallying — the market is treating this as an inflation event, not a growth scare.
Economic calendar
Nothing printed at 08:30 ET this morning, so the pre-market setup is geopolitics and Friday's Fed message rather than fresh US data. The one release already out is European: Germany's preliminary August inflation, published this morning by Destatis, at 2.9% year on year on the harmonised measure — below the roughly 3.0-3.1% expected but up from 2.8% in July, with core steady at 2.4%.
The US day is back-loaded. Chicago PMI for August lands at 09:45 ET, the Dallas Fed manufacturing index at 10:30 ET, and $92bn of 13-week and $79bn of 26-week bills are auctioned at 11:30 ET — worth watching for demand at the front end given how sharply September expectations have moved. The week's main event is Friday's August employment report at 08:30 ET, which will do more than anything else to confirm or kill the hike pricing.
Earnings
No material US results have landed this morning, so the pre-market is being driven entirely by the weekend news. Friday's reports still set the tone in single names: Elastic rose 15.01% after full-year guidance beat expectations and Gap gained 12.94%, while Marvell fell 10.28% as raised revenue forecasts failed to show a clear near-term contribution from its new AI chip partnership. PayPal's 12.71% fall was not an earnings story — it followed a report that Stripe and Advent had walked away from a bid for the company.