Oil prices dropped by more than 2% on Monday after the United States announced plans for additional sanctions targeting Iran, while global stock markets traded cautiously amid uncertainty over inflation, monetary policy and corporate earnings.
Although late August is traditionally a quieter period for financial markets, investor attention remains focused on the conflict between the United States and Iran, ongoing US-Canada trade tensions, and upcoming results from Nvidia, widely regarded as a barometer for the artificial intelligence sector.
Oil slides on sanctions threat
Crude prices fell sharply after US Treasury Secretary Scott Bessent outlined plans for fresh measures aimed at what he described as the "economic suffocation" of Iran.
The proposals would expand Washington's use of secondary sanctions and threaten consequences for countries that continue trading with Tehran.
However, Bessent did not identify specific countries that could be targeted or provide a timetable for implementation.
Mixed performance on stock markets
In the United States, the Dow Jones Industrial Average posted modest gains, while the S&P 500 and Nasdaq both moved lower.
European markets were mixed:
- London closed higher.
- Paris ended lower.
- Frankfurt finished the session in negative territory.
Investors are awaiting key US inflation figures as they attempt to gauge the future direction of interest rates.
Focus turns to Jackson Hole
Market participants are also closely watching this week's annual gathering of central bankers, economists and financial policymakers at Jackson Hole, Wyoming.
Investors are hoping for greater clarity on the outlook for US monetary policy.
The conference comes after Bessent announced that the US Treasury plans to increase buybacks of government bonds in an effort to lower borrowing costs following a rise in long-term Treasury yields to levels last seen in 2007.
Analysts say the move could complicate efforts by the Federal Reserve to bring inflation lower.
According to Ipek Ozkardeskaya of Swissquote, the interaction between Treasury policy and the Fed's inflation-fighting efforts could make this year's Jackson Hole meeting particularly significant.
Nvidia earnings in spotlight
Earlier in the day, Asian markets came under pressure as investors prepared for Nvidia's earnings announcement scheduled for Wednesday.
Technology stocks led declines.
South Korea's Kospi technology index fell more than 3%, weighed down by losses in Samsung Electronics, while markets in Tokyo and Shanghai also closed lower.
Canadian dollar weakens
In currency markets, the Canadian dollar fell 0.7% against its US counterpart, extending losses over the past month.
The move came after Ottawa pledged retaliatory measures in response to new US tariffs following the breakdown of trade talks between the two countries.
Source: CNA
