Oil near $98 and a hawkish Fed greet the US after Labor Day

US cash equities have not traded since Friday, with Monday's Labor Day holiday closing the market. S&P 500 futures are down 0.15% at 7,710.25, while Nasdaq 100 futures are up 0.17% at 29,616.25 — a split that says energy and rate-sensitive value are wearing the morning, not the megacap complex. Friday's closes remain the reference: the S&P 500 finished at 7,718.60, down 0.38%, the Nasdaq Composite down 0.29% and the Dow down 0.51%.

Europe is mid-afternoon and has clawed back an early slide to sit almost exactly unchanged: the FTSE 100 is at 10,821.11, down 0.01%, the DAX flat at 26,005.87, the CAC 40 up 0.01% and the Euro Stoxx 50 up 0.10%. Asia closed lower, led by Tokyo: the Nikkei 225 ended down 1.70% at 65,269.33 as the yen surged, the Kospi ended 0.58% lower and the Hang Seng 0.38% lower, while the Shanghai Composite finished up 0.20%.

Three things are setting the US session. Crude is the loudest: Brent is up 1.81% at $98.02 and WTI up 1.74% at $93.07 after the US struck three Iranian tankers in the Strait of Hormuz at the weekend and Iran's Revolutionary Guard hit tankers and US-linked vessels in reply, with Saudi Aramco's Jizan refinery struck for the second time in a month. Tanker traffic through the strait — normally about a fifth of world oil — has thinned to a trickle, and Iran has since threatened Gulf energy infrastructure directly. That is a supply story, not a demand one, which is why it reads as an inflation problem rather than a growth one.

Japan supplied the second shock. Upward-revised second-quarter GDP and unusually strong July wage data hardened bets on a Bank of Japan increase at the 17–18 September meeting, sending the yen up 1.52% against the dollar to 153.83 and knocking Japan's exporters, whose earnings translate worse on a firmer currency.

The third is the Fed. Friday's August payrolls came in at 162,000 against a consensus nearer 53,000, with unemployment steady at 4.1% and average hourly earnings up 3.1% on the year — enough to put a September hike back in play and to leave Friday's equity session lower. Rates are not pressing the point this morning: the 10-year yield is down 0.8 basis points at 4.776% and the 30-year down 1.0 basis point. Novartis is a separate, sizeable European drag, its del-desiran trial failing its primary endpoint a day after a second setback, taking the Swiss market down 1.38%.

This is caution, not fear. The VIX is up 1.5% at 15.53, far from stress levels, and the MOVE index of rates volatility ended Friday down 2.11% at 73.10 and 6.13% lower over five sessions. The haven bid is thin: gold is up just 0.25% and the dollar index is down 0.25% at 98.912, the wrong direction for a genuine risk-off. Copper's 3.40% jump, to within 0.45% of its 52-week high, argues the cyclical trade is alive. The dispersion is inside equities rather than across asset classes: on PrimerIQ's numbers Friday's US tape had 3,455 advancers against 3,150 decliners, with technology up 0.70% and industrials up 0.41% against consumer discretionary down 1.33% and communication services down 1.19%.

Nothing of consequence hit the tape at 08:30 ET this morning. The one US data point of the day has already landed: the NFIB small-business optimism index for August came in at 98.7, below the 99.3 consensus and down from 99.8, a soft counterpoint to Friday's hot payrolls. The New York Fed's consumer inflation expectations survey and July consumer credit follow later in the session, alongside a three-year note auction.

The week's weight sits further out. The ECB decides on Thursday, with a 25 basis point increase widely expected. US producer prices are due Thursday at 08:30 ET and August CPI on Friday at 08:30 ET — the last inflation reads before the FOMC on 16 September, and the ones that will settle whether Friday's labour-market strength becomes a hike.

No US company of size has reported ahead of the bell, so Friday's results are still doing the work. Lululemon closed 17.38% lower after cutting its full-year outlook again, and Guidewire fell 19.93% on light current-quarter revenue guidance; Fair Isaac's 16.68% drop was regulatory rather than operational, after the FHFA cleared lenders to use a rival credit score. The offset was memory and semiconductor equipment, where SanDisk rose 11.90% and Cerebras 10.30%.