Investors shrug off US sanctions plan for Iran, bitcoin powers on

By Marc Jones and Rae Wee

LONDON/SINGAPORE, Aug 25 (Reuters) – Global share and bond markets regained a sense of calm on Tuesday as investors shrugged off U.S. plans to expand sanctions against Iran and began limbering up for Wednesday’s results from the world’s most valuable company, Nvidia.

U.S. Treasury Secretary Scott Bessent had warned countries on Monday to cut their financial ties with Iran or face secondary sanctions as part of what had been billed as “economic D-Day,” but the Treasury Department stopped short of actually imposing penalties.

It had triggered a modest overnight pullback in both oil prices and benchmark government bond yields, with the latter also helped by a report the U.S. Treasury could tap its cash account to finance increased U.S. debt buybacks. [O/R][US/]

Wall Street futures were pointing to higher restart in New York shortly while European shares were up 0.4% as investors took comfort in the softer-than-feared U.S. Iran announcement, but also pushed defence stocks higher on the likelihood that the conflict will continue for a while yet. [/EU]

In the currency market, the dollar also inched up against the euro and the Japanese yen, though it was the breakdown of the traditional correlation with bond yields that traders remained focused on following the latest bout of volatility.

Michael Metcalfe, head of global macro strategy at State Street Global Markets, said the jump in yields and weakness in the dollar over the last month was a sign that a “negative bias” towards the greenback could be returning.

“There is just a kind of concern about the fiscal situation in the U.S. and you are getting this classic dollar weakness and higher yields,” he said, adding that the next few days would be interesting too, given the run-up to the Federal Reserve’s annual Jackson Hole conference.

The other area that has been whipped up by so-called “dollar debasement” worries is the global cryptocurrency market.

Bitcoin crossed the $80,000 level for the first time since mid-May on Tuesday as another 2% overnight jump took its rise over the last 10 days past 30%.

Gold ticked down 0.6% to $4,624 per ounce, but it too is at its highest since May, up 15% for the month. [GOL/]

Germany’s 10-year bond yield, the benchmark for euro zone borrowing costs, dipped to 3.222%, remaining near the 15-year high of 3.275% touched last week. French 30-year yields were at 4.862% having hit an 18-year high on Monday. [GVD/EUR]

NVIDIA LOOMS LARGE

The tech sector — which heavily dominates global equity indexes — was holding its breath for Nvidia’s results on Wednesday; investors are aware how hard it will be for the chipmaker – one of firms central to the AI boom – to meet lofty expectations.

Analysts are generally looking for quarterly revenue to almost double to around $92 billion, with full-year earnings guidance seen in a range of $103 billion to $105 billion.

“Judging from Nvidia’s track record, it won’t be surprising if they meet the headline numbers,” Fabien Yip, a market analyst at IG, said.

“But I think the piece people are trying to understand is whether there are concerns on the circular deals powering its growth and whether that growth percentage is sustainable in the upcoming quarters.”

Wall Street futures were pointing to the Nasdaq, S&P 500 and Dow Jones Industrial all nudging fractionally higher later following a modest pullback since mid-August as broader market sentiment has wobbled. [.N]

Overnight in Asia, MSCI’s broadest index of Asia-Pacific shares had ended up 0.4% as South Korea, Taiwan and Japan’s Nikkei all gained between 0.5% and 1% . [.T]

China’s CSI300 blue-chip index finished down 0.2% though. The mood there was partially weighed down after Alibaba’s $10.2 billion share sale required a steep discount this week.

Beijing had also warned the U.S. that it would retaliate and take “all necessary measures to firmly safeguard its rights” if Chinese companies were caught up in the Trump administration’s new Iran-linked sanctions.

Asked about the possible sanctioning of Chinese banks U.S. Treasury Secretary Bessent had said, “We want to make clear here today that no one is above the reach of U.S. sanctions.”

The ratcheting up of tensions also comes only a month before Trump and his Chinese counterpart Xi Jinping are scheduled to meet in Washington.

(Reporting by Marc Jones; editing by Andrew Heavens and Nick Zieminski)