Global markets experienced a sharp downturn overnight, with US stocks, European equities, and cryptocurrencies all falling. The trigger was a halt in oil loading operations at Saudi Arabia's Red Sea port of Yanbu, following a closure of the kingdom's east-west pipeline after attacks by Yemen's Houthi rebels, according to shipping industry sources.

International oil prices spiked on the news. WTI crude futures settled up 4.4% to break through the $106 per barrel mark, while Brent crude futures gained 2.9%. This oil surge intensified inflation concerns in bond markets, pushing the 10-year US Treasury yield to 5.04% intraday, its highest level in nearly two decades.

US stocks closed lower, with the Nasdaq falling 0.78%, the Dow down 0.63%, and the S&P 500 sliding 0.45% to its lowest close since August. European markets were also mostly in the red, with the UK's FTSE 100 down 0.40%, France's CAC 40 off 0.32%, Germany's DAX 30 dipping 0.07%, and Italy's FTSE MIB slipping 0.15%.

In the crypto sector, the US Senate failed to advance a landmark cryptocurrency bill early this morning. Analysts view this setback as a major blow to the industry, which has invested hundreds of millions in lobbying over the years, betting on a beneficial long-term regulatory framework. The collapse of this regulatory hope, combined with rising interest rates and tight liquidity, has driven digital assets into the doldrums.

Bitcoin fell as much as 5.3%, while Ethereum dropped over 8.3%, both marking their largest single-day declines since June. Smaller tokens saw even steeper drops. Crypto-related stocks fell broadly, with Circle down over 11%, Coinbase losing more than 10%, Bitmine down over 8%, Strategy sliding over 5%, and Robinhood off more than 3%. Data from CoinGlass shows 116,000 traders globally were liquidated in the last 24 hours, with total liquidation value nearing $700 million.

UN Security Council Convened Over Bab el-Mandeb Strait

The UN Security Council held an emergency meeting on Friday regarding the situation in the Bab el-Mandeb Strait. UN Assistant Secretary-General Khaled Khiari briefed the council that the area and its surroundings have become increasingly volatile in recent days, with fighting escalating along Yemen's western coast. Khiari noted that continued tension in the Bab el-Mandeb and Strait of Hormuz could have severe consequences for international peace and security, global energy markets, food security, and the economies of multiple nations.

The UN called on all parties to exercise restraint, prevent further escalation, and engage constructively in UN-led political efforts to resolve the Yemeni conflict through dialogue.

Significant Damage to US Military Bases in the Middle East

A new report from the US Defense Department's oversight body reveals that recent hostilities with Iran have inflicted substantial damage on American military installations and diplomatic facilities across the Middle East. At least hundreds of buildings and other structures were destroyed or damaged, and more than 50 US military aircraft were harmed or destroyed.

The report states that Iranian strikes damaged or destroyed hundreds of buildings and facilities at US bases in Kuwait, Bahrain, Qatar, the UAE, Saudi Arabia, Iraq, Oman, and Jordan. It also cites approximately $184 million in losses to US diplomatic facilities in Iraq, Kuwait, Saudi Arabia, and the UAE. Between February 23 and June 30, up to 3,500 diplomatic personnel were evacuated from the region.

Since the conflict began, more than 50 US military aircraft have been damaged or destroyed, including four F-15E fighter jets, seven KC-135 tanker aircraft, and at least 30 MQ-9 Reaper drones. The report adds that the war has created strategic stockpile shortages and exposed industrial bottlenecks in replenishing advanced munitions. Photos obtained by CBS News provide the first look at the extensive destruction of buildings and vehicles at multiple US bases in the region from Iranian missiles and drone attacks.

Analysts Weigh In on A-Share Market Outlook

With the Federal Reserve's September meeting approaching, markets are speculating on rate decisions and dot-plot projections. Shifts in overseas liquidity expectations are expected to ripple into domestic capital markets through channels like exchange rates and foreign capital flows, as A-shares and index futures await directional signals from the upcoming rate decision.

According to Zhou Zhiyun, senior macro analyst at Wuzhong Dazhou Futures, the Fed meeting involves numerous variables. The market's baseline scenario is a 25-basis-point hike, with the dot plot guiding one more hike for the full year. However, no single scenario holds probabilistic dominance. If Middle East tensions ease and oil prices retreat, this meeting could mark a "worst-case-scenario" turning point.

Zhou believes the direct impact on A-shares would be a "shoe-dropping" effect if a hike is delivered, potentially boosting market risk appetite. "The direct impact manifests in capital flows and valuations," said Ming Daoyu, macro analyst at East China Futures. If the rate decision leans hawkish, rising Treasury yields would lift global risk-free rates, pressuring high-valuation growth sectors like AI and semiconductors with longer durations. A stronger dollar would also widen the Sino-US rate differential inversion, prompting episodic northbound capital outflows that could weigh on the broader market and contract risk appetite. Conversely, a decision matching or beating expectations would trigger a relief rally, easing outflow pressures and opening a valuation repair window for growth sectors.

On indirect effects, Zhou noted that higher Treasury rates most directly compress discount rates for high-valuation sectors, though semiconductors and AI hardware with strong earnings support could serve as market havens. In a rising rate environment, "bond-proxy assets" like banks, utilities, and shipping with high cash flow certainty would offer defensive qualities.

Ming added that indirect effects mainly constrain domestic policy space. Sustained high Fed rates would limit China's monetary easing room, making broad easing tools more restrained. If external tightening pressures ease, constraints on domestic fiscal and monetary efforts would diminish, aiding domestic demand expectations and indirectly boosting A-share earnings outlooks.

However, A-shares' medium-to-long-term trajectory remains dominated by domestic fundamentals, policy, and industrial momentum, with Fed hikes serving more as a disturbance than a decisive force. Market views on the pace of hikes are divided, with three of the FOMC's 12 members firmly favoring hikes, three potentially supporting them, and Waller's vote likely decisive. Zhou emphasized that the Fed's path remains data-dependent, with no preset rhythm.

Ming suggested three signals to gauge external liquidity's sustained impact on equities: first, signals from the Fed meeting itself, including statement language, dot-plot rate projections, and officials' commentary on inflation and employment; second, high-frequency US data, focusing on core PCE, non-farm payrolls, and wage growth; and third, market signals like 10-year Treasury yields, the dollar index, and the yuan exchange rate, combined with weekly northbound flows to distinguish short-term sentiment from trend shifts.

"External liquidity improvements alone don't guarantee a one-way A-share rally," Ming cautioned. "Only when overseas conditions improve in tandem with domestic demand repair will the positives fully materialize. If domestic demand remains weak, external benefits will mostly translate into structural opportunities."

Zhou reminded that the core driver of rising Fed hike expectations is energy price inflation. Until crude retreats below $80 per barrel, US CPI and PPI decline, and Treasury auction demand recovers, the global liquidity tightening environment is unlikely to reverse materially.