Today’s Market Recap: Brent Crude Tops $90 as US-Iran Conflict Escalates Again, Pressuring US Stocks and Gold

Tracking Market Trends

TradingKey - On August 31, Eastern Time, the three major U.S. stock indices closed lower across the board, with the Dow suffering a relatively notable decline. The re-escalation of the U.S.-Iran military conflict over the weekend pushed international oil prices back above $90, reigniting market concerns that rising energy prices could drive up inflation. Meanwhile, hawkish comments by Federal Reserve Chairman Warsh at the Jackson Hole symposium continued to weigh on the market, sending U.S. Treasury yields higher and further boosting expectations of a September rate hike, which dampened overall risk appetite.

At the close, the Dow Jones Industrial Average fell 0.70% to 53,191.33; the S&P 500 Index dropped 0.33% to 7,686.14; and the Nasdaq Composite Index slipped 0.12% to 26,370.89.

In terms of sectors and individual stocks, energy stocks bucked the trend to move higher, becoming the best-performing sector in the S&P 500 Index. Oilfield services giant Halliburton (HAL) rose 1.85%, while refiner Valero Energy (VLO) also gained 1.86%. In contrast, the utilities sector came under pressure, with PG&E (PCG) plunging 20.06%, its largest single-day drop in over six years, mainly because a California Senate bill amendment failed to effectively address the wildfire liability risks faced by grid operators.

In commodities, the escalation of the U.S.-Iran conflict drove crude oil prices sharply higher. Brent crude (UKOIL) rose 2.72% to close at $90.68, reaching an intraday high of $91.52; WTI crude (USOIL) advanced 3.42% to close at $86.30. Renewed direct military clashes between the U.S. and Iran led markets to price in supply disruption risks in the Strait of Hormuz once again.

In precious metals, gold (XAUUSD) remained under pressure, with spot gold falling to around $4,450. Warsh's hawkish remarks boosted rate-hike expectations, while rising oil prices heightened inflation concerns, and climbing U.S. Treasury yields increased the opportunity cost of holding gold. Despite the recent notable pullback in gold prices, it still logged a gain of nearly 10% for the entire month of August.

Market News

U.S. Strategic Petroleum Reserve drops to lowest level since 1982. U.S. Department of Energy data shows that U.S. Strategic Petroleum Reserve crude oil inventories fell by approximately 3.1 million barrels last week to 286.6 million barrels, the lowest level since November 1982. The U.S. is currently continuing to execute a strategic reserve release plan totaling around 172 million barrels. Against the backdrop of renewed Middle East tensions and oil prices breaking above $90, the further decline in U.S. strategic reserves has drawn heightened market focus to the U.S. capacity to cope with potential energy supply shocks.

Anthropic signs $35 billion AI cloud computing agreement with Lambda. Sources said Anthropic has signed a cloud computing agreement worth approximately $35 billion with Nvidia-backed AI cloud provider Lambda. The agreement will deploy more Nvidia (NVDA) GPU computing power to meet the growing computational demands of its Claude AI services. This is one of the largest cloud computing agreements in the AI infrastructure sector recently.

OpenAI reportedly obtains about $5.5 billion in SB Energy warrants. According to The Wall Street Journal citing draft IPO filings from SB Energy, OpenAI obtained warrants worth approximately $5.5 billion in the power infrastructure company. As power consumption in AI data centers grows rapidly, capital and commercial ties between major AI companies and energy infrastructure firms are deepening further.

Adobe announces Saudi AI partnership valued at over $4 billion. Adobe (ADBE) announced an expanded partnership with Saudi Arabia's Ministry of Communications and Information Technology and Humain, an AI company backed by the Saudi sovereign wealth fund, to provide over 27 million eligible Saudi residents with 12 months of free access to Adobe Firefly Standard and Adobe Express Premium. Adobe stated that this commitment is valued at over $4 billion, with relevant services scheduled to begin rolling out by the end of 2026.

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