August 26, 2026, (Inside AI) — Asian equities paused on Wednesday as sliding oil prices and falling bond yields signaled cautious optimism over the Strait of Hormuz, while traders braced for Nvidia’s second-quarter earnings. The AI chip giant’s results, due later in the day, are viewed as a litmus test for the sustainability of the massive AI spending boom.
Iran said it had restarted talks with Oman to manage the Strait, a chokepoint that handled a fifth of the world’s traded oil before the nearly six-month conflict. Brent crude futures fell more than 2% to $86.41 per barrel, extending a three-day slide. That eased inflationary fears and pushed the yield on U.S. 10-year notes down 6.5 basis points to 4.634%.
Analysts at J.P. Morgan cautioned that the Iran-Oman talks lacked concrete progress. “While there was no real progress or details of the Iran-Oman deal, as Iran reiterated that Hormuz will remain shut until conditions are met, price action suggested that markets are quickly pricing in optimism around an interim announcement,” they wrote in a note.
The market’s focus now shifts to Nvidia, whose earnings have become a barometer for the entire AI trade. MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.12%, set for a 2% monthly gain. Japan’s Nikkei slipped 0.4%, while South Korea’s tech-heavy KOSPI dipped 0.2%. Nasdaq futures fell 0.5%.
Charu Chanana, chief investment strategist at Saxo in Singapore, said the bar for Nvidia has risen sharply. “Nvidia is approaching the point where beating expectations is expected, so the headline numbers alone may not determine the market reaction,” she said. “The question is less whether Nvidia beats and more how big the beat is and whether guidance is strong enough to keep earnings expectations moving higher.”
Chanana noted that options data hints at a smaller post-earnings move than in previous quarters, suggesting results are becoming more predictable. Analysts expect Nvidia to forecast an 82.8% rise in third-quarter sales to $104.20 billion. Adjusted gross margin is expected to hold near 75%.
J.P. Morgan analysts said Nvidia’s release would likely be “supportive of the AI trade though perhaps without giving a material near-term boost” to the semiconductor sector. That tempered view reflects a market already pricing in robust AI infrastructure spending, with less room for upside surprises.
Dollar Weakness Fuels the Debasement Trade
Currency markets stayed calm as traders awaited U.S. inflation data later in the day, ahead of the Jackson Hole symposium this weekend. The dollar index held at 98.934, on track for a 1% decline in August. Investors are grappling with the U.S. Treasury’s expanded debt buyback program, which aims to ease pressure on longer-dated yields.
Kristina Clifton, an economist at Commonwealth Bank of Australia, warned the move does not fix the core problem. “While this will ease overall interest costs at the margin, it does not change the underlying drivers of rising interest payments: the US government’s rising stock of debt and concerns about fiscal dominance/Fed independence,” she said.
That has shifted pressure from bonds to the dollar, reviving the so-called debasement trade. Investors are buying assets like gold and bitcoin, betting that government spending and debt will erode currency values. Spot gold fetched $4,646.08 per ounce, just shy of a three-month high. Bitcoin rose 0.6% to $78,704.
The convergence of geopolitical relief, AI earnings anxiety, and fiscal concerns creates a fragile backdrop. If Nvidia’s guidance disappoints, the AI-driven rally in tech shares could stall. If inflation data surprises higher, the dollar’s slide may accelerate, reinforcing the case for hard assets. For now, markets are holding their breath.
