Stocks, oil slip ahead of US threat of economic war against Iran / Photo: © AFP
Stocks, oil slip ahead of US threat of economic war against Iran
Oil prices eased after strong gains last week while stock markets faltered on Monday as investors awaited details of a US plan to impose massive economic pressure on Iran to end the Middle East war.
Wednesday's earnings report from chip giant Nvidia and Thursday's opening of the annual gathering of central bankers in Jackson Hole were also adding to caution on stock markets.
In New York, the Dow was little changed in early trading, but the wider S&P 500 and the tech-heavy Nasdaq were lower.
London, Paris, and Frankfurt were all marginally lower at mid-afternoon in Europe.
"Trade tensions are back in the headlines this morning following the US and Canada's failure to reach a trade agreement, tensions in the Middle East continue to disrupt oil flows, and debt levels across the so-called developed world keep rising," said Ipek Ozkardeskaya at Swiss Quote.
All eyes were on US Treasury Secretary Scott Bessent, who is to hold a press conference later Monday to outline new actions against Tehran, as the war drags on with no sign of a deal to reopen the crucial Strait of Hormuz.
Bessent wrote in The Financial Times that Washington was launching the "single greatest financial offensive marshalled against an adversary", calling it an "economic D-Day".
Both main crude contracts were around two percent lower, though the Brent benchmark was still trading well above $90 a barrel after jumping more than seven percent last week.
"There may be some relief that the threats have moved from military strikes to some form of super sanctions, but there is little confidence that a route to a peace deal will open up any time soon," said Susannah Streeter, chief investment strategist at Wealth Club.
Traders will also be watching this week's annual gathering of central bankers, economists and finance chiefs in Jackson Hole in the United States, hoping for greater clarity on US monetary policy.
The meeting comes after Bessent said the US Treasury would buy back more of its own bonds to try to push down borrowing costs after the 30-year yield surged to levels last seen in 2007.
Those moves may be opposed by Federal Reserve Chairman Kevin Warsh because it complicates the Fed's efforts to push down inflation.
"That's why Jackson Hole could be explosive," said Swiss Quote's Ozkardeskaya.
Asian markets were hit by a fresh wave of pressure on technology stocks, with investors awaiting Wednesday's earnings report from Nvidia, a bellwether for the artificial intelligence rollout.
The recurring question for the US chip giant is whether the AI boom will continue to accelerate as the technology spreads into more areas of the broader economy.
Nvidia shares were down almost one percent, with a report over the weekend saying it had raised prices for some of its flagship chips.
"These results will also offer insight into demand for AI infrastructure, how Nvidia is managing Chinese competition and what the future holds" for the sector, said Kathleen Brooks, research director at trading group XTB.
South Korea's tech-heavy Kospi fell more than three percent, weighed down by a sharp drop in Samsung Electronics shares, and Tokyo and Shanghai also closed lower.
Hong Kong closed nearly two percent down despite fast-fashion giant Shein announcing its market debut will take place in the Chinese financial hub on September 1.
The long-awaited listing would value the retailer, known for its vast selection of products at stunningly low prices, at close to $27 billion.
Chinese tech giant Alibaba is also keeping attention on the tech sector after announcing Sunday that it planned to issue $10.2 billion in new shares in Hong Kong to fund its AI ambitions.
On currency markets, the Canadian dollar fell 0.5 percent against the US dollar, extending declines over the past month after Ottawa vowed to retaliate against new US tariffs after trade talks between the neighbours broke down.
"As a smaller, more open economy, Canada has more to lose from this, but Prime Minister Mark Carney seems to have opened the door to more fiscal stimulus to support affected business," said analysts at ING.
- Key figures at around 1335 GMT -
Brent North Sea Crude: DOWN 1.2 percent at $91.59 per barrel
West Texas Intermediate: DOWN 1.7 percent at $85.60 per barrel
New York - DOW: UP 0.1 percent at 53,340.52 points
New York - S&P 500: DOWN 0.3 percent at 7,651.72
New York - Nasdaq: DOWN 0.6 percent at 26,015.81
London - FTSE 100: DOWN less than 0.1 percent at 10,814.61
Paris - CAC 40: DOWN 0.3 percent at 8,457.18
Frankfurt - DAX: DOWN 0.2 percent at 26,090.84
Tokyo - Nikkei 225: DOWN 0.7 percent at 65,528.09 (close)
Hong Kong - Hang Seng Index: DOWN 1.9 percent at 25,517.33 (close)
Shanghai - Composite: DOWN 0.6 percent at 3,882.01 (close)
Dollar/yen: UP at 159.14 yen from 159.03 yen on Friday
Euro/dollar: DOWN at $1.1673 from $1.1679
Pound/dollar: DOWN at $1.3642 from $1.3647
Euro/pound: DOWN at 85.54 pence from 85.58 pence
S.Murphy--VC
