Written by: Chao Xiang Research

Last Friday, the three major U.S. stock indexes ended two consecutive days of gains and collectively closed lower, with the S&P 500 down 0.38% at 7718.60 points, the Nasdaq down 0.29% at 26506.99 points, and the Dow down 0.51% at 53414.25 points. For the week, the Dow fell a total of 0.27%, the S&P 500 dipped 0.08%, and the Nasdaq gained 0.54%. The key factor suppressing the market was that the August non-farm employment data exceeded expectations, leading to a resurgence in the market's bets on a September interest rate hike, with short-term U.S. Treasury yields rising to a more than one-and-a-half-year high. However, the market did not fall uniformly; funds concentrated in the chip sector, causing the Philadelphia Semiconductor Index to soar 3.37% to 11735.26 points, with the storage and optical communication sectors all strengthening. Over the weekend, the geopolitical situation escalated again, with Iran announcing that it would declare a "restricted area" in the Strait of Hormuz in the coming days, leading to heightened military confrontation between the U.S. and Iran, with WTI crude oil opening higher in early trading on Monday. This week's focus: August CPI data and the evolution of the U.S.-Iran conflict.

Non-farm data exceeds expectations, reigniting concerns about interest rate hikes; chip sector attracts funds against the trend

U.S. August non-farm employment data significantly exceeded expectations, causing the market to re-bet on a Federal Reserve interest rate hike in September. Short-term U.S. Treasury yields rose to over a one-and-a-half-year high, with the 2-year Treasury yield up 3.4 basis points to 4.3703%, touching 4.416% during trading, the highest since January 2025; the 10-year Treasury yield held around 4.78%. The U.S. dollar index rose 0.27% to 99.177, reversing its previous decline.

The rising expectations for interest rate hikes directly suppressed high-valuation assets. The three major indexes ended two consecutive days of gains and collectively closed lower, with the S&P 500 down 0.38% at 7718.60 points, the Nasdaq down 0.29% at 26506.99 points, and the Dow down 0.51% at 53414.25 points. Market pricing for a September interest rate hike returned to over 50% after the non-farm data was released.

However, funds did not leave the equity market entirely but instead selectively concentrated in directions supported by industrial logic, particularly in chip stocks. The Philadelphia Semiconductor Index soared 3.37% to 11735.26 points, setting a new closing high since August 27. The storage and optical communication sectors led the way, with Nvidia rising over 2%.

The industrial logic behind this performance is clear: the order data for AI infrastructure continues to validate, Dell's previous guidance for record AI server orders is still taking effect, and Broadcom raised its AI revenue guidance to $58 billion and provided a long-term roadmap of $230 billion by 2028, all of which continuously strengthen market confidence in the AI hardware chain. The rise in interest rate expectations suppresses overall valuation levels, but the robust fundamentals of specific sectors can still attract funds.

The seven tech giants face overall pressure. The Wind U.S. Technology Seven Giants Index fell about 1.13%, with Tesla dropping 5.92% leading the decline. Tesla’s drop is linked to the macro interest rate environment, as high-valuation, high-growth stocks are most sensitive to interest rate changes. Nvidia performed strongly against the trend, closing up over 2%. Lululemon continued to be under pressure after a previous drop of over 17% in after-hours trading.

Iran announces establishment of "restricted area" in the Strait of Hormuz, oil prices open high

Geopolitics again became a major variable in the market last weekend. On September 6 local time, Iran’s Supreme National Security Council Secretary Rezaei stated that Iran would declare a "restricted area" in the Strait of Hormuz in the coming days. On the same day, the Iranian Islamic Revolutionary Guard Corps (IRGC) Navy announced that the force had sunk a U.S. naval drone attempting to enter the Strait of Hormuz.

Prior to this, the U.S. military had been continuously applying pressure in the Strait of Hormuz. The U.S. Central Command reported that as of September 6, the U.S. military had requested 92 merchant ships to change course during its maritime blockade against Iran, causing three merchant ships to lose operational capability and boarding two vessels for inspection. The IRGC claimed it fired ballistic missiles at a U.S. aircraft carrier and a destroyer.

The confrontation between the U.S. and Iran in the Strait of Hormuz is evolving from friction to comprehensive confrontation involving blockades and counter-blockades. Iran's announcement of the establishment of a "restricted area" means that any foreign vessels entering the area without permission will face military risks, posing a direct threat to global oil transportation routes.

As a result, WTI crude oil opened higher in early Asian trading on Monday. Last Friday, WTI crude oil rose 0.20% to $91.48 per barrel, while Brent crude oil rose 0.80% to $96.28 per barrel, both gaining about 9% over the week. The average retail price for diesel in the U.S. reached $5.85 per gallon, setting a record. If passage through the Strait of Hormuz becomes further obstructed, oil prices may continue to rise.

The escalation of geopolitical risks, combined with the renewed expectations for interest rate hikes after the non-farm data, constitutes dual pressure on the market this week.

Global central banks accelerate gold localization; gold sees V-shaped rebound recovering most of the lost ground

According to a recent survey by the World Gold Council, in the past 12 months, 19% of central banks increased their domestic gold reserves or diversified their allocations, up from only 7% a year ago. The number of central banks storing gold in New York and London continues to decrease, and rising geopolitical risks are changing the configuration of global gold reserves.

Spot gold fell 0.97% to $4429.29 per ounce last Friday, having once dropped over 2% to $4365.25 during the trading session before clawing back most of its losses, showing a V-shaped rebound trend.

This week's focus

U.S. August CPI data (Thursday). After the non-farm data exceeded expectations, the market's bets for a September interest rate hike have rekindled. The CPI will be a key data point to verify whether Waller's earlier statement about "the continued downtrend in inflation" holds true. If CPI exceeds expectations, the likelihood of a September rate hike will further increase; if CPI weakens, the dovish expectations arising from Waller’s remarks may regain the upper hand.

The evolution of the U.S.-Iran conflict in the Strait of Hormuz. How the U.S. will respond after Iran announces the establishment of a "restricted area," and whether passage through the Strait will be further obstructed, will directly affect oil price trends and global risk appetite. Brent crude has already gained about 9% last week, and if the situation continues to escalate, oil prices may rise further and push up inflation expectations.

Changes in the IPO timeline of Anthropic. According to media reports, Anthropic is expected to start its IPO roadshow as early as mid-October, completing its listing a few days before the November U.S. midterm elections. Previously, the market expected the prospectus to be released as early as next week, but it has now been postponed to late September. As one of the most closely watched IPOs in the AI sector, changes in its listing rhythm will impact market sentiment in the AI sector.

This week's three directions are now clear: the non-farm data has reignited concerns about interest rate hikes, the chip sector has attracted funds against the trend based on industrial logic, and the escalation of the U.S.-Iran conflict in the Strait of Hormuz has added a geopolitical premium to oil prices. The combination of these factors is likely to keep volatility high this week.