Iran-related geopolitical risks heightened concerns over energy supplies, accelerating the flight from riskier assets in global markets. December Brent crude futures rose 3.6% to around $91.5 a barrel, while stock markets declined.
U.S. President Donald Trump's threat of new attacks on Iran and concerns that energy flows through the Strait of Hormuz could be disrupted for an extended period drove the increase in oil prices. Trump announced that the United States would respond to the attacks after Iran targeted U.S. air bases in Jordan with ballistic missiles.
Russia's extension of its diesel export ban until September 30 also heightened concerns over refined fuel supplies.
Oil gains affect Fed expectations
Concerns that rising oil prices could increase inflationary pressures strengthened expectations that the U.S. Federal Reserve will raise interest rates in October. Interest-rate pricing in money markets largely reflects expectations of an October hike, while the release of stronger-than-expected nonfarm payrolls data in the United States could further reinforce those expectations.
Speaking at the G20 Finance Ministers and Central Bank Governors Meeting, U.S. Treasury Secretary Scott Bessent said economic growth was the G20's top priority.
Fed Chair Kevin Warsh said during a session on growth that inflation and growth represented a matter of choice. Saying that U.S. economic growth appeared to have strengthened, Warsh said they would address questions concerning capital spending and productivity.
Speaking during a banking session, Warsh also drew attention to the broad range of lending institutions in the United States and the depth of its financial markets. Stressing the importance of a safe, sound and competitive banking system, Warsh said they would remain focused on reform.
Bond yields and safe havens
Driven by rising oil prices and expectations of higher interest rates, the yield on the U.S. 10-year Treasury note rose to 4.79%, reaching its highest level since January 2025. The dollar index rose 0.1% to 99.5, while gold fell 0.5% to $4,430 an ounce.
New York stocks close lower
Pressure from geopolitical tensions led the New York Stock Exchange to end the first trading day of the week lower. The Dow Jones fell 0.7%, the S&P 500 lost 0.33% and the Nasdaq declined 0.12%.
U.S. stock-index futures opened mixed on the new trading day.
Iran tensions raise inflation concerns in Europe
European stock markets declined as selling pressure in bond markets and Iran-related geopolitical tensions heightened inflation concerns. Germany's 10-year bond yield rose to 3.32%, reaching its highest level in 15 years amid concerns over the rise of the far right.
The London Stock Exchange was closed for a public holiday. Rising financing costs across Europe put selling pressure particularly on real estate and technology stocks.
Germany's consumer price index rose 0.2% month on month and 2.9% year on year in August. The data came in slightly above expectations. France's CAC 40 fell 0.79%, Germany's DAX 40 declined 1.17% and Italy's FTSE MIB 30 lost 0.01%. European stock-index futures also opened lower.
Oil weighs on Asian markets
Geopolitical risks, rising oil prices and higher bond yields led to predominantly selling-driven trading in Asian stock markets.
Japan's 10-year bond yield reached 3% for the first time since 1996 after reports that Scott Bessent wanted the Bank of Japan to raise interest rates more aggressively.
China's RatingDog manufacturing PMI rose to 51.5 in August from 50.9. While the data pointed to continued demand in the manufacturing sector, concerns over domestic demand and cost pressures stemming from geopolitical risks were assessed as continuing.
South Korea's exports rose 68.7% year on year in August, exceeding expectations. The data showed that global demand, particularly for technology products, remained strong.
Near the close, the Kospi fell 0.1%, the Nikkei 225 declined 0.1% and the Hang Seng lost 1%. The Shanghai Composite Index traded flat.
Borsa Istanbul also declines
The BIST 100 index ended the previous trading day down 2.10% at 14,334.06 points. The August futures contract based on the BIST 30 index on Borsa Istanbul's Futures and Options Market also fell 1.2%.
The dollar/Turkish lira pair ended the previous day flat at 48.2560 and traded at 48.2770 at the opening of the interbank market.
Domestically, the manufacturing Purchasing Managers' Index will be monitored, while overseas attention will focus on the U.S. JOLTS job openings, global manufacturing PMI data and eurozone inflation. Technical assessments identified 14,200 and 14,100 points as support levels and 14,400 and 14,500 points as resistance levels for the BIST 100.
Data to watch
- 10:00: Turkey's August manufacturing PMI
- 10:55: Germany's August manufacturing PMI
- 11:00: Eurozone August manufacturing PMI
- 11:30: The United Kingdom's August manufacturing PMI
- 12:00: Eurozone August consumer price index and July unemployment rate
- 16:45: U.S. August manufacturing PMI
- 17:00: U.S. August ISM manufacturing PMI and July JOLTS job openings
