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HONG KONG: Asian stocks fluctuated Tuesday while oil edged up as investors assessed a US plan for the “economic asphyxiation” of Iran, with tech firms struggling after another down day on Wall Street and ahead of earnings from chip titan Nvidia.
With the war against Tehran now in its sixth month, Treasury Secretary Scott Bessent said the White House was declaring an “economic D-Day” on the Islamic republic and threatened to hit countries that trade with it. The threat comes with talks to reopen the Strait of Hormuz stalled and neither side showing any sign of backing down — pushing oil prices up for most of August, which has in turn fanned long-term inflation fears and put pressure on bond markets.
“Around the globe, our objective is to sever every economic lifeline that sustains this tyrannical regime until Tehran stands alone,” Bessent told journalists Monday. “We are going to hold everyone accountable, and this is economic asphyxiation of this regime,” he said, adding that countries not joining US sanctions would “share” in Iran’s isolation. President Donald Trump was making phone calls to world leaders asking them to stop interactions with Tehran, Bessent said. The Treasury Department said Iran’s digital assets, technology, gold, aviation and shipping sectors would be targeted.
Both main crude contracts fell more than 2 percent Monday as Bessent’s comments appeared to suggest Washington would hold off military action, but they ticked higher in early Asian trade. His “increasingly aggressive economic campaign against Iran is designed to squeeze Tehran’s access to the global financial system while keeping the pressure economic rather than allowing the market to immediately price another military escalation”, wrote Stephen Innes, global strategist at Quintex Intel. “For now, oil appears to have heard the message that way, which is doing Washington the considerable favor of taking some inflation pressure out of the system.”
Equities still struggled as tech firms bore the brunt of selling, tracking a retreat on Wall Street. Tech-rich Seoul sank more than 2 percent at one point as chipmakers SK hynix and Samsung fell, while Hong Kong, Shanghai, Taipei and Manila were also off. Tokyo, Sydney, Singapore and Wellington gained.
The tepid performance comes ahead of much-anticipated earnings from Nvidia, which has become something of a bellwether for the artificial intelligence (AI) boom. With vast sums lavished on AI investment over the past two years, markets are growing increasingly nervous about whether firms can deliver results to match, and analysts warn that even forecast-beating figures can sometimes not be enough.
“Investors are not simply asking whether Nvidia can deliver another strong quarter,” said Charu Chanana at Saxo Markets. “They are asking whether it can deliver enough upside to justify already-high expectations, especially with bond yields elevated.” Releases from other tech names including Salesforce and Marvell are also in focus.
Attention turns as well to this week’s annual gathering of central bankers, economists and finance chiefs in Jackson Hole, Wyoming, where Federal Reserve chief Kevin Warsh is due to speak. His comments will be parsed for clues about monetary policy with inflation still stubbornly high, and after Bessent said the Treasury would buy back more of its own bonds to push down borrowing costs following a surge in the 30-year yield to a 19-year high.
The Canadian dollar edged higher after retreating against the greenback Monday as Trump vowed to double tariffs on vehicles from its neighbor. The threat follows the failure of the two sides Friday to reach a deal to avert new 50-percent US tariffs on select Canadian goods. The duties took effect Saturday, and Ottawa laid out plans for retaliation. — AFP
Key figures at around 0230 GMT
Tokyo – Nikkei 225: UP 0.1 percent at 65,598.68 (break) Hong Kong – Hang Seng Index: DOWN 0.3 percent at 25,452.91 Shanghai – Composite: DOWN 0.1 percent at 3,876.42 Dollar/yen: UP at 159.21 yen from 159.15 yen on Monday Euro/dollar: UP at $1.1666 from $1.1663 Pound/dollar: UP at $1.3637 from $1.3629 Euro/pound: DOWN at 85.55 pence from 85.57 pence West Texas Intermediate: UP 0.7 percent at $85.57 per barrel Brent North Sea Crude: UP 0.5 percent at $92.59 per barrel New York – Dow: UP 0.3 percent at 53,417.16 (close) London – FTSE 100: UP 0.4 percent at 10,854.32 (close)
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