Asia shares slide as Iran clash lifts oil, yields stay elevatedGold extends slide as hawkish Warsh hangover weighs on sessionA pop for yen despite USD/JPY weakening earlier past 160 as Warsh’s hawkish tone clashes with BessentBofA says Warsh’s Jackson Hole speech raises pressure for September hikeAustralian inventory data for Q2 will be a drag on GDP growthChina factory activity beats forecasts but stays in contraction in AugustChina official August Manufacturing PMI 49.8 (expected 49.7, prior 49.2)PBOC sets USD/ CNY reference rate for today at 6.7828 (vs. estimate at 6.7344)US fact checks IRGC as war of words follows Larak Island strikeNew Zealand data: ANZ business survey shows August business confidence 53.7 (prior 56.1)Goldman Sachs still sees Fed on hold despite Warsh’s hawkish Jackson Hole toneJapan factory output tops forecasts as retail sales rebound sharplyPreview – Path of least resistance: ASB expects consensus RBNZ hike this weekMore from Bessent, presses G20 to confront China’s $1.2 trillion trade surplusBessent says yen slide is contained, backs Ueda ahead of G20 talksReserve Bank of New Zealand Shadow Board split, most back 25bp rate hike this weekOil prices have jumped higher after US attacked Iran and Iran retailiatedOil – Escalation news: Iran fires missiles from four provinces after Larak Island strikeNew week, catch up time! Warsh’s hawkish Jackson Hole remarks lift rate hike odds, pressure stocksMonday open indicative forex prices, 31 August 2026U.S. forces have struck two Iranian launchers near Strait of HormuzWhy AI alignment is impossibleinvestingLive Americas FX news wrap 28 Aug
Summary:
US struck Iran’s Larak Island on Sunday, the first strikes in over a month, after forces were seen preparing rockets fitted with sea mines aimed at the Strait of Hormuz.Iran launched ballistic and anti-ship missiles from multiple provinces and struck two US bases in Jordan, King Hussein and Al Azraq; a US source says most incoming missiles were intercepted with no significant impact so far.Trump posted that Kharg Island, which handles roughly 90% of Iran’s oil exports, was “blown to smithereens,” but the accompanying video was AI-generated.Treasury Secretary Bessent said weekly new secondary sanctions on Iran are likely, focused initially on banks, after penalties on a UAE branch of Banque Misr on Friday, with a full cut-off from the dollar system possibly next.Bessent called yen moves well contained and backed BOJ Governor Ueda’s handling of policy; the yen still firmed on the session as Japanese yields extended their climb, with the 10-year JGB hitting its highest level since September 1996 and the 5-year touching a record high near 2.21%.Gold stayed pressured after Friday’s hawkish-Warsh selloff, dipping below $4,400/oz for the first time since August 19; Barclays now expects the Fed to hike 25bp in both September and December.China’s official manufacturing PMI improved to 49.8 in August from 49.2, still in contraction; regional equities fell broadly on the combination of the Iran escalation and firmer US rate expectations.Australia’s Melbourne Institute inflation gauge cooled to 0.5% month-on-month in August from 1.0% in July, but the annual pace accelerated to 4.8% from 4.0%, an uncomfortable signal for the RBA ahead of its September 29 meeting.
Oil prices jumped and Middle East tensions flared anew after the US carried out its first strikes on Iran in more than a month, prompting an Iranian retaliation against American forces in the region. US forces struck Iran’s Larak Island on Sunday after personnel were observed preparing to launch rockets fitted with sea mines toward the Strait of Hormuz, according to a US official. Iran responded by launching ballistic missiles from several provinces and anti-ship cruise missiles toward the strait, while also striking two US bases in Jordan, King Hussein and Al Azraq. A US source told media that nearly all incoming missiles had been intercepted and there had been no significant impact so far, while Iran’s Revolutionary Guard said it had destroyed aircraft maintenance infrastructure and support facilities at both bases.
Trump posted on social media that Iran’s Kharg Island, which handles around 90 percent of the country’s oil exports, was being “blown to smithereens,” without providing further detail. The accompanying video clip was synthetically generated, and neither the White House nor the Defense Department immediately responded to requests for comment. Any genuine strike on Kharg would represent a significant escalation given the island’s role in Iran’s oil trade.
Separately, Treasury Secretary Scott Bessent told Reuters that Washington is likely to unveil new secondary sanctions on Iran on a weekly basis, with an initial focus on banks. That follows Friday’s penalties on the United Arab Emirates branches of Egypt’s Banque Misr over alleged financial links to Iran, with Bessent suggesting the next step could be cutting an institution off entirely from the dollar-based financial system.
On currencies, Bessent described the yen’s recent moves as well contained and said he trusts BOJ Governor Kazuo Ueda to handle policy appropriately, ahead of a planned meeting between the two at this week’s G20 gathering in Asheville. The yen nonetheless firmed on the session, alongside a further rise in Japanese government bond yields. The 10-year JGB yield reached its highest level since September 1996, while the 5-year yield touched a record high near 2.21 percent, extending a run of pressure on Japan’s bond market tied to BOJ rate-hike expectations. Separately, Japan’s most recent industrial output and retail sales data for July had both beaten forecasts, adding to the case for continued policy normalisation even as manufacturers themselves flagged a likely pullback in September output.
Gold remained under pressure, extending Friday’s sharp selloff triggered by Fed Chair Kevin Warsh’s hawkish Jackson Hole remarks, with spot prices dipping below $4,400 an ounce for the first time since August 19 as the dollar and yields stayed elevated. Barclays has revised its Fed outlook to now expect back-to-back 25 basis point hikes in September and December, having previously anticipated no change in rates.
In China, the official manufacturing PMI improved to 49.8 in August from 49.2 in July, beating forecasts but remaining in contractionary territory for a second straight month, with the non-manufacturing gauge unchanged at 49.0. The mixed data, combined with the Iran escalation and firmer US rate expectations, weighed on regional equities, with Japan’s Nikkei and South Korea’s Kospi both under pressure while Chinese shares posted a smaller decline.
In Australia, the Melbourne Institute’s monthly inflation gauge cooled to a 0.5 percent rise in August from 1.0 percent in July, but the annual pace accelerated to 4.8 percent from 4.0 percent. The pickup in the yearly rate, landing just ahead of the RBA’s next scheduled meeting on September 29 and the central bank’s own monthly inflation print, points to price pressures that remain uncomfortably elevated for policymakers despite the softer month-on-month read.
This article was written by Eamonn Sheridan at investinglive.com.