Oil extends gains, stocks drop as Trump issues fresh Iran warning
Tokyo, Hong Kong, Seoul, Shanghai, Sydney and Singapore traded lower as investors turned cautious.
Oil prices continued to rise on Tuesday (Sep 1) as investors grew cautious, amid concerns of renewed military exchanges between the United States and Iran following a recent escalation. The situation was further exacerbated by President Donald Trump's warning that he would hit Iran hard in response to the conflicts.
The latest confrontations between the two nations have heightened worries about inflation, which has put pressure on central banks to raise interest rates. This, in turn, has caused a decline in equity markets. The conflict remains unresolved, with Tehran maintaining the closure of the Strait of Hormuz and Washington continuing its blockade of Iranian ports.
The U.S. carried out strikes on an Iranian island in the waterway on Sunday, while Iran retaliated by attacking U.S. military targets in the Middle East. These actions raised fears of a return to major hostilities, with Trump vowing to respond.
US officials revealed that the U.S. targeted rocket launchers on the island of Larak to prevent Tehran from planting mines in the strait, while Iran targeted U.S. forces in Jordan and the United Arab Emirates. Both sides have conducted strikes in the past, but recent events have raised concerns about the potential for further escalation.
The situation remains delicate, as stalled talks and the strategic importance of keeping the Strait open leave it vulnerable to further conflict. National Australia Bank's Rodrigo Catril noted that while the initial actions were measured, the possibility of a turning point in the pressure campaign could arise within weeks or months.
U.S. Treasury Secretary Scott Bessent stated that the administration would continue to exert pressure on Iran, as discussed at a G20 meeting in North Carolina. A turning point in the pressure campaign may come within weeks or months, according to Bessent.
Meanwhile, stocks across major markets, including Tokyo, Hong Kong, Seoul, Shanghai, Sydney, Singapore, and Wellington, experienced a drop, while Taipei, Manila, and Jakarta rose. The release of key economic data, such as jobs and consumer price index reports, ahead of the Federal Reserve's policy meeting on Sep 16, will likely influence the outcome of the meeting.
Elevated inflation and rising borrowing costs have pushed the yield on 10-year U.S. Treasuries to their highest level since January 2025, impacting bond markets in Asia as well.
Written by urgent.news from Channel News Asia's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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