Renewed Middle East conflict dents Wall St; Amazon in FTC’s sights

Oil prices were back on the rise amid the latest exchange of strikes between the US and Iran, sending a chill through Wall Street in the final day of the month after Federal Reserve chair Kevin Warsh’s speech on Friday raised the prospect of a rate hike next month.

The Magnificent 7 megacap companies were mixed, with Amazon leading the Dow Jones Industrial Average lower amid reports the e-commerce giant’s ad pricing was in the sights of the Federal Trade Commission, while Apple declined as chief executive Tim Cook’s tenure at the top draws to a close.

US Treasury secretary Scott Bessent jawboned currency markets, saying he expects more action to strengthen Japan’s yen ahead of a Group of 20 finance ministers meeting, where he met his Russian counterpart.

And Australian futures are pointing to a soft start to the day for the ASX, with CSL in view after the blood plasma giant was one of nine companies agreeing to a new pricing deal in the US.

Uneasy times

Brent crude oil futures rose 2.7% to US$90.51 a barrel at 7am in Auckland as the US and Iran exchanged strikes in the Middle East for the first time in a month, reviving fears the conflict could escalate again.

“It has been an uneventful end to August, following a fairly uneventful month overall,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “Bond and equity markets were modestly weaker as the US and Iran exchanged missile fire in the Middle East after a month of reduced military activity.”

Energy majors such as Chevron and ExxonMobil Holdings rallied in a broadly softer day for Wall Street, with the S&P 500 down 0.5% and the tech-heavy Nasdaq Composite falling 0.4%.

The Dow fell 0.6%, led by a 2.4% decline for Amazon after the Wall Street Journal reported the FTC planned to file a lawsuit against the e-commerce giant accusing it of manipulating prices businesses paid to advertise on the retail platform.

Meanwhile, OpenAI said its advertising business reached US$1 billion of annualised revenue in its pathway towards a potential initial public offering. Fellow IPO candidate Westinghouse Electric expects the growing demand for electricity from data centres will support the nuclear reactor maker’s bid to go public.

US President Donald Trump pushed back against growing discontent with the societal costs of building data centres, saying communities that didn’t embrace them risked becoming “backwards and poor”.

Among other megacaps, Apple declined as CEO Tim Cook told staff he’d miss running the iPhone maker as he prepares to hand over the top job to successor John Ternus. Under Cook’s leadership, Apple stock soared more than 2,200%, or roughly 24% a year.

And Nvidia joined a recovery among chipmakers and semiconductor firms after the company invested US$3.5 billion in Taiwanese chipmaker MediaTek.

Meanwhile, Bitcoin nudged up 0.2% to US$79,022 after treasury firm Strategy bought the cryptocurrency for the first time since June.

Getting hands on

The kiwi dollar traded at 94.52 yen at 7am from 94.59 yen yesterday after US Treasury secretary Scott Bessent said he expected more action from Japan’s government and central bank to support the nation’s currency, saying he had information the market didn’t.

Across the Atlantic, Germany’s DAX dropped 1.2% and France’s CAC 40 declined 0.8%, while UK markets were closed for a bank holiday.

Bloomberg reported eight European Union nations including Germany and France were pushing to change how the bloc makes foreign policy to mitigate blockages from the current policy requiring unanimous support.

Meanwhile, fast-fashion giant Shein sank as much as 17% in grey market trading ahead of its formal listing in Hong Kong on Tuesday, while China’s Huawei Technologies reported a 37% slide in first-half profit as it ramped up spending on research and development.

Australian futures are pointing to a 0.3% decline for the S&P/ASX 200 index when trading opens across the Tasman. The Australian benchmark rose 1.1% in August, compared to a 1.6% monthly gain for New Zealand’s S&P/NZX 50 index.

CSL will be in focus today as it was one of nine companies that signed US President Trump’s latest round of drug pricing deals aimed at making healthcare more affordable for Americans.

Chinese manufacturing gauges are the main data in the Asian trading session.

Reporting by Paul McBeth. Image from Marques Thomas on Unsplash.