Daily market review
Hormuz tension lifts commodities as a 4.75% yield weighs on equities
Monday’s session was reshaped by a renewed clash between the United States and Iran: commodity prices rose while global equities retreated. On Tuesday morning, South Korea’s chip exports showed that technology demand remains strong, but high bond yields and energy inflation are limiting how far that strength can support the broader market.
This week’s central question
Can strong earnings and improving manufacturing offset inflation that keeps interest rates high?
What changed since yesterday? The growth side gained support from South Korean semiconductor exports and new manufacturing orders in China. Yet a renewed clash near the Strait of Hormuz lifted commodity prices, while the yield on the United States ten-year government bond reached 4.75%. Strong technology demand therefore still does not offset the combined pressure from energy, inflation and expensive borrowing across the whole market.
Challenges growth: the broad commodity index rose 1.60%, German energy prices increased 10.5%, and the United States ten-year yield reached 4.75%
The next answer: the euro-area inflation estimate on September 1 and the United States labour-market report on September 4
01 Geopolitics, energy and risk
A renewed clash near the Strait of Hormuz lifted commodity prices and showed how quickly energy-supply risk can reach the whole portfolio
Facts
The NYSE market recap and the AP news agency, citing the United States Central Command, reported that the United States and Iran exchanged strikes on Monday for the first time since July. At the close, the broad commodity index calculated by S&P Global, covering energy, metals and agricultural commodities, delivered a total return of 1.60%. The S&P 500 index of large United States companies lost 0.33%, Europe’s S&P Europe 350 index fell 0.68%, and the global-equity S&P Global BMI index declined 0.32%.
Why it matters
The Strait of Hormuz is a central energy-shipping route, so any disruption immediately raises insurance, freight and oil-delivery costs. The United States Energy Information Administration estimates that the flow of oil and other liquid fuels through the strait averaged 4.9 million barrels a day in the second quarter of 2026, compared with 21.6 million in the fourth quarter of 2025. That is roughly 77.3% less, making the remaining supply more sensitive to any new disruption.
Portfolio impact
Higher selling prices can lift revenue for energy and some materials companies if their own operating and transport costs do not rise just as quickly. Airlines, logistics providers, chemical producers and energy-intensive manufacturers face more expensive fuel and inputs, which can reduce profit margins. Bonds carry an additional risk because higher energy prices can raise inflation and delay interest-rate cuts, while demand for safer assets can support the United States dollar and exposure to gold.
Opportunity and risk
The opportunity would come from maritime protection and diplomacy reducing the tension. The energy premium could then fall quickly, easing pressure on consumers and transport companies. The main risk is a broader conflict or a further decline in traffic through the strait, which would raise both oil prices and the cost of delivering goods. The next useful signal is actual vessel movement and new reports of military activity, rather than political statements alone.
02 United States, inflation and interest rates
The Federal Reserve’s firm inflation message lifted long-term government-bond yields, keeping financing expensive for households and companies
Facts
Federal Reserve Chair Kevin Warsh stressed on Friday that the United States central bank remains committed to its 2% inflation goal. The personal consumption expenditures price index, which tracks the prices of goods and services bought by United States residents, rose 3.7% from a year earlier in July, while its six-month annualised pace reached 4.1%. In addition, 54% of the index components increased by more than 3%. On Monday, the official United States ten-year government-bond yield rose from 4.73% to 4.75%, while the thirty-year yield increased from 5.22% to 5.25%. The two-year yield remained at 4.34%.
Why it matters
A bond yield shows the return investors require for lending to a government. When long-term yields rise, company loans, mortgages and financing for new projects over a similar period generally become more expensive as well. The Federal Reserve says short-term interest rates remain its primary tool, so inflation of 3.7% and broad price increases reduce the chance of rapid rate cuts merely because growth in one part of the economy has slowed.
Portfolio impact
Shorter-maturity United States bonds and money-market instruments can retain higher current income if the central bank does not cut interest rates. Long-duration bond prices, indebted smaller companies, property assets and highly valued growth shares remain more sensitive to another increase in yields. For an investor whose portfolio is measured in euros, the United States dollar also changes the final result: a stronger dollar can offset part of a price loss, while a weaker dollar would magnify it.
Opportunity and risk
The opportunity is growth without another price surge. Softer labour-market readings and moderating inflation would allow yields to fall, helping bonds and high-quality growth companies. The opposite is the main risk: strong demand and more expensive energy could accelerate prices again, keeping interest rates high for longer. The next catalysts are United States job-openings data on September 1 and the labour-market report on September 4.
03 Asia, technology and global demand
South Korean semiconductor exports signalled very strong technology demand, but growth remains concentrated in a few products and markets
Facts
Official South Korean data released on Tuesday morning showed that August exports reached 98.25 billion United States dollars, an increase of 68.7% from a year earlier. Imports rose 22.5% to 63.51 billion dollars, leaving a trade surplus of 34.75 billion dollars. Semiconductor exports amounted to 46.65 billion dollars and increased 209%, while computer exports reached 6.24 billion dollars, an increase of 419.5% from a year earlier. Exports to China grew 119.3%, while shipments to the United States increased 89.3%.
Why it matters
South Korea is a major supplier of memory chips, displays, vehicles and other industrial components, so its exports offer an early view of the direction of global manufacturing. Semiconductors accounted for almost half of all August exports, suggesting that demand for artificial-intelligence infrastructure and data centres can support the country’s overall trade. That concentration also means a slowdown in chip orders would quickly affect production, investment and company profits.
Portfolio impact
Strong chip demand supports Asian semiconductor producers, memory suppliers, manufacturing-equipment companies and parts of European industry that sell equipment to data centres. It can also support the South Korean won and regional equities. Yet rapid growth from a lower comparison base does not show that the expansion has reached consumption or smaller businesses. Expensive financing and trade restrictions could weaken the investment chain even while final demand continues to grow.
Opportunity and risk
The opportunity is for orders to spread from chips into electrical equipment, software, cloud services and traditional industry. The main risk is a cyclical inventory build followed by buyers reducing new orders, or further technology-trade restrictions between the United States and China. The next signals will be export data from other Asian economies, investment plans from large cloud-computing companies, and evidence that South Korean growth is becoming broader than semiconductors.
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04 Europe, energy and purchasing power
German, French and Spanish data showed energy-driven inflation, leaving limited room for lower European interest rates
Facts
German consumer prices increased 2.9% from a year earlier in August and 0.2% from the previous month. The Harmonised Index of Consumer Prices, designed for comparison across European Union economies, also rose 2.9% over the year and 0.2% over the month. Annual energy-price inflation accelerated from 8.3% in July to 10.5% in August, while prices excluding food and energy increased 2.4%. French harmonised inflation reached 2.7%, with energy prices up 16.7%. Spanish harmonised inflation was 4.5%, headline inflation 4.3%, and core inflation 2.9%.
Why it matters
Energy first raises the direct cost of fuel, electricity and heating, then increases expenses for transport, manufacturing and some services. Headline inflation in Germany is already above the 2% price-stability threshold, although its core measure is below the headline rate. If the energy shock spreads through the wider consumer basket, the European Central Bank will have less room to reduce interest rates even if consumption is weak and regional growth slows.
Portfolio impact
Energy companies and shorter-maturity euro interest-rate instruments can prove more resilient if both energy prices and central-bank interest rates remain high. Long-duration bonds, property companies, retailers and energy-intensive industry face more pressure. For a Lithuanian investor, more expensive energy reduces the real value of wages and savings, while a weaker euro would further raise the local-currency cost of oil purchased in United States dollars.
Opportunity and risk
The opportunity is a rapid easing of geopolitical tension and stabilisation in energy prices, allowing core inflation to continue moderating. The main risk is a second wave in which more expensive transport and production feeds into service prices and wage demands. The next catalyst is the euro-area August inflation estimate due on September 1. It will show whether signals from the region’s large economies reflect a broader pattern.
05 China, manufacturing and costs
Chinese manufacturing orders returned to growth, but weak smaller firms, services and rising input costs do not yet signal a broad recovery
Facts
China’s National Bureau of Statistics published its August purchasing managers’ indices on Monday. The manufacturing purchasing managers’ index, or PMI, summarises company orders, production and employment and rose from 49.2 to 49.8 points. A reading above 50 generally indicates expansion, while a reading below 50 suggests contraction. The production index reached 50.4 and new orders 50.6. High-technology manufacturing stood at 52.9, but the reading for smaller companies was 47.9, non-manufacturing activity was 49.0, and the composite economic-activity index was 49.5.
Why it matters
New orders above 50 show that factory demand began to improve after July’s weakness, but the whole economy has not yet moved into expansion. The increase in the raw-material purchase-price index to 56.6 points is particularly important. If manufacturers cannot pass higher costs to customers, their profit margins will narrow. If they do pass them on, some of the pressure will reach global goods inflation and complicate central-bank decisions.
Portfolio impact
Better orders can support industrial metals, Asian exporters, European equipment manufacturers and logistics companies. The high-technology manufacturing reading complements the strong signal from South Korean chip exports. Weak services and smaller companies, however, remain a risk for exposure to Chinese domestic consumption and retail. Rising raw-material costs can help materials producers but squeeze manufacturers, transport companies and bonds if they strengthen inflation expectations.
Opportunity and risk
The opportunity is continued order growth spreading from large and high-technology manufacturers to smaller companies and services. The main risk is a brief inventory restocking cycle without sustainable final demand, especially while the composite economic-activity index remains below 50. The next Chinese industrial-production, retail-sales and export releases will show whether the 50.6-point orders signal turned into real sales growth.
Today’s portfolio compass
Technology demand is strong, but energy and interest rates determine what that growth is worth
Two opposing forces define today’s market. South Korean semiconductor-export growth and China’s new-orders reading of 50.6 show that demand for artificial-intelligence infrastructure and Asian manufacturing remains strong. Yet the renewed clash between the United States and Iran, the 1.60% rise in the broad commodity index and the 4.75% United States ten-year government-bond yield are raising the price of energy and borrowing. Germany’s 10.5% energy inflation shows how geopolitical risk can reach European consumers and central-bank decisions. This backdrop is more favourable to technology and energy companies with strong cash flows and to shorter-maturity interest-rate instruments. Long bonds, heavily indebted companies, transport and property remain more exposed. The counterweight is that real technology demand keeps the growth story alive, but it is still too narrow to lift the whole market on its own.
Important information. This is a general market commentary, not an individual investment recommendation. Market, economic and company data can change, and the value of investments can fall.
