Asia Markets Mixed as Iran Sanctions Loom, Oil Supply Risks Rise

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The US Department of the Treasury

US Treasury Secretary Scott Bessent

By Nandinee Keluskar

Nandinee Keluskar is an independent financial journalist.

August 24, 2026 at 2:15 AM IST

Global Mood: Cautiously Risk-off
Drivers: US economic sanctions on Iran,

Asian markets traded mixed Monday as investors adopted a cautious risk-off stance ahead of a major US sanctions package targeting Iran. South Korea’s Kospi fell 1.53% and Japan’s Nikkei declined 0.46%, while Australia’s ASX 200 gained 0.25%. US futures pointed to a subdued start after the S&P 500 and Nasdaq fell last week, ending three-week winning streaks. Oil prices eased ahead of the sanctions announcement, but Brent remained above $93 a barrel and more than 50% higher this year, keeping inflation and supply risks elevated.

Gold held near $4,620 an ounce as lower yields and a softer dollar supported demand for safe havens. Markets are particularly focused on the risk of secondary sanctions on Iran’s trading partners, especially China, and Tehran’s threat to halt Gulf oil exports if economic pressure intensifies. The prospect of further disruption to global energy supplies is keeping investors defensive despite tentative diplomatic efforts by Pakistan, Qatar and Turkey.

THE BIG STORY
The US-Iran confrontation shifted decisively to the economic front Sunday as Treasury Secretary Bessent described Monday's planned sanctions package as "economic D-Day — the single greatest financial offensive ever marshalled against an adversary," targeting Iran's trade partners and signalling consequences for any nation that continues engaging with Tehran's economy and financial system. Iran responded by threatening to halt all oil exports from the Gulf entirely if the economic war continues, with a senior security council official warning that "not a single drop of oil will be exported, neither through the Strait of Hormuz nor from anywhere in the Persian Gulf." The threat, if carried out, would represent a dramatic escalation beyond the current Hormuz near-standstill, potentially cutting off a fifth of global oil supply entirely. China — which buys over 80% of Iran's shipped oil and receives half its total oil imports from the Gulf — is the key secondary target, though Beijing has urged diplomacy and any sanctions on Chinese entities risk significant retaliation. Pakistan's army chief arrived in Tehran Monday as a mediator, and Qatar and Turkey continue back-channel efforts, but with no face-to-face talks since June and both sides hardening their positions, the diplomatic runway is shrinking rapidly.

Data Spotlight
The S&P Global US Manufacturing PMI eased to 53.2 in August from 53.9 in July, a five-month low and below expectations, as output growth slowed for a third consecutive month amid higher fuel costs, raw material shortages and reduced inventory building. Supply times lengthened sharply again, while input cost inflation remained elevated due to energy prices and tariffs, though selling price inflation moderated.

The S&P Global US Services PMI surged to 56.8 in August from 54.6 in July, far above expectations of 54.0 and the strongest reading since December 2024, as new business rebounded sharply from the second-quarter demand dampening tied to the West Asia conflict. Staffing levels rose firmly, and business confidence improved for a third consecutive month.

The S&P Global US Composite PMI rose to 56.0 in August from 54.5 in July, a 52-month high, driven by the services revival offsetting manufacturing's slowdown. Employment grew at its fastest pace since early 2025, and future activity expectations hit a nine-month high, while selling price inflation softened even as input costs remained elevated.

Takeaway: A surge in services activity drove US private sector growth to its strongest in over four years in August, suggesting the economy is regaining momentum after a soft patch. However, manufacturing's continued slowdown and persistently elevated input costs point to an uneven recovery, with supply chain pressures and energy prices remaining key risks.

WHAT HAPPENED OVERNIGHT

US stocks face twin tests from Nvidia earnings and Jackson Hole as bond yields pressure AI rally

The S&P 500 fell 2% from its record high this week as the 30-year yield hit its highest since 2007, dragging the Philadelphia Semiconductor Index down 5%.
Nvidia's April-June results on August 26 are the next key test for AI ecosystem demand and data centre spending momentum.
Nvidia recently partnered with six financial institutions on platforms targeting over $500 billion in AI infrastructure financing.
Jackson Hole on August 27-29 marks Warsh's first symposium, with investors seeking clarity on his policy framework after July's press conference rattled markets.
Markets price 35% odds of a September hike and 66% by December, with July PCE and GDP data due before the symposium as key inputs.
Treasury buyback efforts provided only brief yield relief, sharpening focus on Warsh's Jackson Hole communication as the next key catalyst.

US Treasury yields retest 20-month highs as structural pressures overwhelm Treasury's buyback efforts

The 10-year yield rose to 4.74%, fully erasing the decline triggered by the Treasury's announcement to at least double long-maturity buybacks to $4 billion next quarter.
Structural drivers like soaring AI company debt issuance, higher federal deficit spending, and elevated energy prices from the Persian Gulf tanker blockade continued to overwhelm intervention efforts.
Warsh's signals that rate hikes may not be his preferred inflation tool raised the stakes for his Jackson Hole debut, with markets pricing 35% odds of a September hike and 66% by December.
The Treasury's broader yield-management package, including the US-Japan joint yen intervention and the push to expand the Fed's FIMA facility, has so far provided only temporary relief to the long end of the curve.

Dollar on track for 1% weekly loss as Treasury buyback plan boosts market volatility and safe-haven alternatives

The dollar index held at 98.8, with Wednesday's sharp decline on the buyback announcement quickly partially reversed as yields rebounded Thursday, highlighting concerns the plan offers only a temporary fix.
Rising US government debt concerns made the dollar less attractive, boosting demand for safe-haven metals and other currencies at the greenback's expense.
Higher oil prices as the US prepares sweeping new Iran sanctions added to inflation concerns, further complicating the dollar's outlook.

Oil edges up as Trump threatens unprecedented sanctions on Iran's trading partners

Brent settled at $94.39/bbl, up 0.65%, and WTI at $87.06, up 0.26%, with weekly gains of 6.39% and 5.66% respectively as both benchmarks touched their highest since July 24 on Thursday.
Iran vowed a "devastating" response to Washington's pledge to impose the toughest financial penalties in history aimed at toppling the Iranian leadership, with Treasury Secretary Bessent set to detail measures on Monday.
The immediate supply impact of new sanctions may be limited as Iranian exports are already heavily constrained by the US naval blockade, though escalating shipping incidents and retaliation risks could worsen the situation.
Only seven commodity ships crossed the Strait of Hormuz on Thursday, half the prior day's tally, as the six-month-old war continues to curtail flows through the waterway that previously carried a fifth of global oil and LNG.
Iranian crude offers to Chinese buyers have declined, and prices have jumped as the US blockade bites, with further sanctions threatening to squeeze Tehran's already constrained export capacity.
Alternative supply sources including pipelines, US shale, Venezuela, and the UAE are adding barrels, partially offsetting Hormuz disruption, analysts noted.
Ukraine struck a Russian oil refinery in Perm, over 1,600km from the Ukrainian border, extending its deep-strike campaign on Russian energy infrastructure.

Day’s Ledger*

Economic Data

US Chicago Fed July National Activity Index

Corporate Actions

Piramal Finance Limited and UCO Bank to consider fund raising

Tickers to Watch

RELIANCE INDUSTRIES: Shareholders approve three resolutions on August 20, 2026, covering material related-party transactions and expansion of objects clause to include ammonium nitrate, explosives, blasting agents, fertilisers and agro-chemicals.
CAPLIN POINT LABORATORIES: US FDA issues Form 483 with 10 observations after unannounced inspection at a manufacturing unit, conducted August 13-21, 2026.
NATCO PHARMA: US FDA issues Form 483 with 4 observations after inspecting its FDF unit in Hyderabad, conducted August 17-21, 2026.
CHOKSI LABORATORIES: US FDA concludes inspection at central laboratory in Indore, conducted August 17-20, 2026, resulting in 4 observations.
MOBILE & EMS STOCKS (DIXON TECHNOLOGIES, OPTIEMUS INFRACOM, KAYNES TECHNOLOGY, SYRMA SGS TECHNOLOGY, AVALON TECHNOLOGIES, CYIENT DLM): In focus after government notifies Mobile Phone Manufacturing Scheme 2.0.
POWERGRID: Declared successful bidder under TBCB to set up inter-state transmission system for renewable energy projects in Gujarat, at discovered tariff of 8.2291 billion rupees per annum.
APOLLO MICRO SYSTEMS: Open Offer Manager receives SEBI letter regarding proposed open offer to acquire up to 1.40 crore shares of Premier Explosives.
FEDERAL BANK: Board approves raising up to $500 million via foreign currency-denominated bonds through its IFSC Banking Unit at GIFT City.
JUBILANT PHARMOVA: Receives USFDA approval for commercial batch manufacturing on Line 3, a new isolator-based fill-and-finish line at its Spokane, Washington facility, operated by subsidiary Jubilant HollisterStier LLC.

Must Read

(*Compiled from various media sources)

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