Oil prices dropped sharply on Monday after US President Donald Trump said he was preparing for fresh negotiations with Iran to end the conflict in the Middle East, despite Tehran’s denial that any talks were underway.
Crude futures slid more than 6% following the announcement, which also lifted stock markets. The development offered hope for easing tensions in a region critical to global energy supplies.
Currency intervention boosts yen
The yen surged against the dollar after US and Japanese authorities confirmed they had intervened in currency markets on Monday, buying Japan’s currency following months of weakness. However, the intervention led to a nearly 1% drop in Japan’s main stock index, as a weaker yen typically benefits major exporters like Sony and Toyota by inflating import costs.
Tech stocks weigh on Asian markets
Technology companies continued to face heavy losses across Asian markets as investors questioned whether massive investments in artificial intelligence would deliver sustainable profits. Chipmakers SK hynix and Samsung dragged down South Korea’s Kospi index after a brief rally on Friday.
European stock markets, which feature fewer technology companies than their Asian and US counterparts, mostly posted solid gains. London’s performance flattened after pharmaceutical giant AstraZeneca saw its share price slump 5% following reports of a potential merger with US rival Bristol Myers Squibb.
Focus shifts to US jobs data
Beyond geopolitical risks, investors are watching the US economy after the Federal Reserve held interest rates steady last week despite calls from some policymakers to raise rates to combat inflation.
“The focus as we move through the week will be the US non-farm payrolls report, which will be another test of the resilience of the US labour market,” said Kathleen Brooks, research director at trading platform XTB.
On currency markets, the dollar traded mixed, rising against the pound and euro but falling sharply against the yen after the rare joint US-Japan intervention. The yen had been wallowing near its weakest dollar level since 1986, pressured by higher US interest rates, rising oil prices and persistent capital outflows from Japan.
Despite Monday’s decline, oil prices remain well above levels seen before the United States and Israel launched strikes against Iran, sparking a conflict that has sharply curtailed Gulf exports of oil and other key products. Trump said the latest US-Iran negotiations would cover the Strait of Hormuz, which has become a main sticking point in the conflict.
His announcement came after he threatened to hit Iran “very hard” and was reportedly considering renewed attacks including against energy infrastructure. He pulled back from that threat on Saturday, saying the “perimeters” of a deal were there.
The decline in oil prices was aided by an agreement between Saudi Arabia, Russia and five other OPEC+ members to boost production by 188 000 barrels a day from September, analysts said.
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