Global markets were driven this week by four main themes: a deeper US-Iran confrontation, another round of US tariff increases, a sharp decline in the yen, and pressure on technology stocks linked to AI capital spending.
Oil leads as US-Iran conflict widens and shipping routes come under strain
Oil was the market’s main trading focus. The US military completed a 13th consecutive night of strikes on Iranian military targets and deployed B-1 bombers to strengthen its attack capability. Iran’s Revolutionary Guard said it had struck US military facilities in Kuwait, Bahrain and Jordan, as well as Larak Island.
Pressure on regional shipping routes also intensified. Traffic through the Strait of Hormuz remained disrupted. At the same time, Houthi forces announced a maritime blockade on Saudi Arabia and said they had attacked two Saudi oil tankers, extending conflict risks into the Red Sea.
Brent crude rose above $100 a barrel for the first time in two months, and the two major oil benchmarks were set for a third straight weekly gain. Diplomatic contacts between Washington and Tehran were still underway, but Iran rejected a 10-day ceasefire proposal, while the US said Tehran lacked sincerity in negotiations.
Trump administration rolls out multiple tariff measures in one week
US trade policy was another major source of volatility. The Trump administration introduced a series of tariff actions over the week, affecting nearly 60 economies.
- A 50% tariff was imposed on about $20 billion worth of Canadian goods, effective Aug. 19.
- The US adjusted its aluminum import tariff policy and set investment incentives in exchange for preferential tariff treatment.
- Imported generic drugs will keep a zero-tariff treatment for two years, after which tariffs of 100% to 200% will be phased in starting in 2028.
- Most Brazilian goods were hit with a 25% tariff.
- The administration also launched Section 301 tariffs on 60 economies, citing insufficient restrictions on forced-labor products by trading partners. The move replaced temporary global tariffs that expired the same day and covered 99.4% of total US imports.
Yen drops past 163 as intervention warnings remain verbal
In foreign exchange markets, the dollar rose to 163.98 yen, the highest level since November 1986. That move pushed the yen beyond the 163 mark and to its weakest level since 1986.
Japan’s Ministry of Finance and the Chief Cabinet Secretary repeatedly signaled this week that authorities were ready to intervene at any time, but there was still no sign of actual market operations by Friday. The US Treasury, in its semiannual currency report, said the yen was significantly undervalued. Japan remained on the currency monitoring list, though it was not labeled a currency manipulator.
AI spending concerns hit major tech stocks
US equities closed the week under pressure. The Dow fell for a third straight week, while the S&P 500 and Nasdaq each posted a second consecutive weekly decline.
Alphabet reported 24% year-over-year revenue growth in the second quarter, with cloud revenue up 82%. Even so, its shares fell after the company raised its 2026 capital expenditure outlook to a range of $195 billion to $205 billion and reported negative free cash flow of $5.9 billion.
Tesla reported second-quarter revenue of $28.236 billion, up 26% from a year earlier. But operating profit fell 57%, and its margin narrowed to 1.4%. Capital expenditure jumped 142% year over year. The stock dropped about 14.5% on Thursday and nearly 18% for the week, marking its biggest weekly decline since 2022 and the worst performance among the Magnificent Seven.
The group lost nearly $800 billion in market value in a single day. At the same time, OpenAI, Advanced Micro Devices (AMD), and SpaceX continued to increase spending in the race for computing power and chips.