Global stocks edged higher on Tuesday while oil prices retreated as investors weighed the latest US pressure campaign against Iran and assessed the potential impact on energy markets, inflation and interest rates.
The market movement came after US Treasury Secretary Scott Bessent announced tougher economic measures against Tehran, describing the administration’s strategy as an attempt to cut off Iran’s financial lifelines.
The development has drawn particular attention from energy traders because negotiations over reopening the Strait of Hormuz have stalled. The waterway is a major route for global oil shipments, meaning prolonged disruption could further push up energy prices and add to inflationary pressures.
Bessent said the United States would target areas including Iran’s digital assets, technology, gold, aviation and shipping industries as part of the expanded sanctions campaign.
He also warned countries that continue trading with Tehran that they could face consequences, while saying President Donald Trump had been contacting foreign leaders to discourage further dealings with Iran.
The latest US approach appeared to reduce some concerns about an immediate military escalation. Oil prices, which had risen for much of August because of the conflict and uncertainty around the Strait of Hormuz, fell sharply on Monday before recovering slightly in early Asian trading.
Stephen Innes, global strategist at Quintex Intel, said the US strategy appeared aimed at applying economic pressure on Iran without immediately escalating the military confrontation.
Investors turn to Nvidia earnings
Stock markets across Asia and Europe largely moved higher despite the previous session’s weakness on Wall Street.
Tokyo, Seoul, Hong Kong, Shanghai, Taipei, Singapore, Sydney and Wellington all recorded gains, while markets in Manila, Mumbai and Bangkok declined.
In Europe, London and Paris opened slightly higher, while Frankfurt also gained after revised figures showed that German economic growth in the second quarter was stronger than initially estimated.
Much of the market’s attention, however, is focused on Nvidia’s latest earnings report.
The US chipmaker has become one of the key companies associated with the global artificial intelligence boom, with investors closely watching whether its financial performance can continue to justify the huge expectations surrounding AI-related spending.
Charu Chanana of Saxo Markets said investors were looking beyond whether Nvidia would post another strong quarter and were instead assessing whether its results would be sufficiently strong to support the company’s elevated market expectations.
Other technology companies, including Salesforce and Marvell, are also scheduled to report results.
Investors await central bank signals
Markets are also looking ahead to the annual gathering of central bankers, economists and financial officials in Jackson Hole, Wyoming.
Attention will centre on comments from Federal Reserve Chair Kevin Warsh, with investors seeking indications about the direction of US monetary policy at a time when inflation remains a concern.
Bond markets have also remained under pressure after the US 30-year Treasury yield reached a 19-year high.
Bessent said the Treasury planned to increase its purchases of government bonds, a move aimed at reducing borrowing costs.
Meanwhile, the Canadian dollar recovered slightly against the US dollar after falling on Monday following Trump’s threat to double tariffs on vehicles imported from Canada.
The latest tariff dispute followed the failure of Ottawa and Washington to reach an agreement to prevent new US duties on selected Canadian goods. The measures took effect on Saturday, prompting Canada to prepare retaliatory action.
Market snapshot
By around 0715 GMT, Japan’s Nikkei 225 had gained 0.5 per cent to 65,856.43, while Hong Kong’s Hang Seng rose 0.1 per cent to 25,532.22.
Shanghai’s Composite Index added 0.2 per cent to 3,889.44, while London’s FTSE 100 was up 0.1 per cent at 10,869.17.
The dollar traded at 159.36 yen, compared with 159.15 yen on Monday, while the euro slipped to $1.1653 from $1.1663.
Brent crude fell 0.8 per cent to $91.47 a barrel, while West Texas Intermediate declined 0.7 per cent to $84.39.
The Dow Jones Industrial Average had gained 0.3 per cent at the previous close, reaching 53,417.16.