Asian stocks slip as Iran threats push oil near $98

Asian equity markets mostly declined on Tuesday, September 8, as escalating U.S.-Iran tensions in the Persian Gulf pushed oil prices higher and stoked fresh inflation fears ahead of a pivotal week for monetary policy signals. The MSCI Asia Pacific Index slipped 0.2%, with benchmarks in Japan and Australia falling, while South Korea's Kospi bucked the trend with a gain of over 1%.straitstimes+1

Brent crude briefly topped $98 a barrel on Monday before settling near $97, after Iran threatened to retaliate against any new attacks by targeting energy infrastructure across the Gulf, including U.S. oil and gas interests. Tehran also said a deal with Oman to manage shipping through the Strait of Hormuz was imminent, raising questions about how Washington would respond following weekend strikes on Iranian vessels.tradingview+3

"The weekend's tit-for-tat strikes between the U.S. and Iran continued to put upward pressure on oil prices, acting as a drag on risk sentiment more broadly," Westpac analysts said.globalbankingandfinance+1

Yen Surges, Dollar Weakens

The Japanese yen surged to its strongest level since February, advancing as much as 0.6% to 153.51 per dollar, surpassing the peak reached after coordinated intervention by Japan and the U.S. earlier this year. The rally built on a 1.2% gain on Monday, driven by growing bets on Bank of Japan rate hikes.tradingview+2

Japanese real wages rose 2.4% in July from a year earlier, marking the biggest increase since May 2021. "With wage growth going from strength to strength, the case for the Bank of Japan to hasten the pace of tightening is becoming increasingly compelling," Capital Economics analysts wrote. The U.S. dollar index fell to a two-week low near 98.82.globalbankingandfinance+1

All Eyes on CPI and the Fed

Investors now face a packed week of U.S. economic data culminating in the consumer price inflation report on Friday, September 11, which could prove decisive for whether the Federal Reserve raises interest rates at its September 16 meeting. Traders are pricing roughly a 60% probability of a 25-basis-point hike, according to the CME Group's FedWatch tool.globalbankingandfinance+2

Earnings from Oracle ↗ 0.31% and Adobe ↘ 0.41% on Thursday, September 10, will also offer a fresh read on artificial intelligence infrastructure spending. In commodities, gold rose 0.5% while copper climbed to an all-time high on the London Metal Exchange, driven by expectations that President Trump will broaden tariffs to refined metal imports.straitstimes+1

"Markets will be adjusting their positioning heading into the Fed's blackout period," said Geoff Yu, senior macro strategist at BNY. "The risk is the Fed turning hawkish and that will be reflected in equities."straitstimes