Markets Roiled by Iran Conflict, Hawkish Fed, and Unrelenting AI Boom

Global markets are facing three key factors that will shape their performance in the coming days. The first is the ongoing conflict between the US and Iran, which has led to a flare-up around the Strait of Hormuz and put a new 'war premium' into oil prices. Brent crude jumped back above $90 per barrel after the Larak Island strikes, while WTI traded near $86.

The second factor is the hawkish tone set by Federal Reserve Chair Kevin Warsh in his Jackson Hole address. While he refused to provide specific interest-rate guidance, his comments sent odds of a September rate hike soaring above 50%. The dollar index climbed to a two-week high, while gold initially wobbled before central-bank and dollar-debasement buying returned.

The third factor is the ongoing AI boom, which continues to drive market momentum. Nvidia's blowout earnings saw its shares jump roughly 7-9%, lifting semiconductor stocks across the board. With hyperscaler capital-expenditure commitments expected to rise to $1.3 trillion next year, this trend shows no signs of slowing.

Indian investors are also grappling with a mixed earnings season and elevated crude prices, which have put pressure on energy-importing economies like India's. The combination of these factors argues for selective positioning rather than broad-based optimism.