Oil prices fall as U.S. pledges fresh economic campaign against Iran
Oil prices declined on Monday as investors awaited details of a new U.S. initiative aimed at isolating Iran's economy, which President Donald Trump has described as the "most crushing" financial operation ever directed against Tehran.
The announcement set the tone for global markets, with most Asian stock indices opening lower. South Korea's Kospi fell 1.4 per cent after Samsung Electronics said it would spend $80 billion on a share buyback programme, a move aimed at stabilising its stock after weeks of turbulent trading.
Samsung's shares, along with those of rival SK Hynix, had reached peaks in June on optimism about the artificial intelligence boom. They have since retreated as investor concerns over valuations and a broader technology sell-off took hold.
This week, market attention will also be on Nvidia's earnings report. The U.S. chipmaker, now the world's most valuable company, is widely viewed as a bellwether for the AI sector. The critical question for investors is whether the AI boom can sustain its momentum as the technology becomes more deeply embedded across industries.
"The spending machine is still running, but the bill is getting heavier," said Stephen Innes, managing partner at SPI Asset Management. "Nvidia must now show that the most expensive investment boom in modern market history can still pay its bills."
Chinese technology company Alibaba is also in focus after announcing on Sunday that it plans to issue $10.2 billion in new shares in Hong Kong to fund its global AI ambitions. The company, known for its open-source "Qwen" AI models, has been investing tens of billions of dollars in the technology. Shareholders are eager to see how these investments will translate into revenue.
Asian markets were mixed on Monday. Tokyo, Shanghai, Taipei, and Wellington fell, while Sydney, Jakarta, and Bangkok posted gains. Manila and Kuala Lumpur were flat. Hong Kong's Hang Seng index dropped more than 2 per cent, despite the announcement by fast-fashion retailer Shein that its long-awaited market debut will take place in the city on September 1. The listing is expected to value the company at close to $27 billion.
On the geopolitical front, U.S. Treasury Secretary Scott Bessent said he would provide further details later on Monday about a renewed push to apply economic pressure on Iran. The United States has called on allies and China to join the campaign, which comes as the ongoing conflict in West Asia nears the six-month mark.
U.S. Vice President J.D. Vance acknowledged the plan was a "delicate dance," adding that Iran would "try to apply economic pressure to us." Asked whether Washington would press Beijing on the matter, Bessent told CNBC that "many conversations are best to have in private," but urged China "to get with the programme."
The impact on oil markets was immediate, with both main crude contracts falling 2.3 per cent. Brent crude was trading at $92 a barrel.
Investors are also looking ahead to this week's annual gathering of central bankers, economists, and finance officials in Jackson Hole, Wyoming, where the Federal Reserve Bank of Kansas City hosts discussions on monetary policy. The meeting is expected to provide clarity on the path of U.S. interest rates.
This year's meeting comes after the Treasury bought its own bonds last week to push down borrowing costs, a move aimed at easing a sharp rise in long-term yields. The 30-year yield had surged to levels last seen in 2007, just before the global financial crisis. Yields have risen on inflation concerns and after the United States reported that its federal debt had topped $40 trillion.
