The renewed escalation of geopolitical tensions linked to Iran increased concerns about the future of energy supplies. The rapid rise in oil prices led investors to move away from risky assets and intensified selling pressure across global markets.
December-delivery Brent crude rose 3.6% to trade at around $91.50 a barrel. U.S. President Donald Trump's new threat of an attack on Iran and concerns that energy flows through the Strait of Hormuz could be disrupted for an extended period were decisive factors behind the price movement.
After Iran targeted U.S. air bases in Jordan with ballistic missiles, Trump announced that they would retaliate against the attacks. Russia's extension of its diesel export ban until September 30 also heightened concerns about refined fuel supplies.
Oil gains affect Fed expectations
Expectations that rising energy costs could increase inflationary pressure strengthened forecasts that the U.S. Federal Reserve would raise interest rates in October. While the increase was largely priced into money markets, expectations of a rate hike could strengthen further if the U.S. nonfarm payrolls data comes in strong.
Speaking at the G20 Finance Ministers and Central Bank Governors Meeting, U.S. Treasury Secretary Scott Bessent said that economic growth was their top priority within the G20.
Fed Chair Kevin Warsh, speaking during a session on growth, said that inflation and growth were a matter of choice and stated that growth in the U.S. economy appeared to have strengthened. Warsh said they would focus on questions concerning capital spending and productivity.
Warsh also spoke during the banking session, drawing attention to the diversity of lending institutions in the United States and the depth of financial markets. Emphasizing the importance of a safe, sound and competitive banking system, Warsh said they would continue their reform-oriented approach.
Bond yields and gold decline
The rise in oil prices and expectations of higher interest rates also affected the U.S. bond market. The yield on the U.S. 10-year Treasury rose to 4.79%, reaching its highest level since January 2025.
The dollar index rose 0.1% to trade at 99.5. The price of gold fell 0.5% to $4,430 an ounce.
U.S. stocks begin the week lower
New York stocks ended the first trading day of the week lower as geopolitical tensions reduced risk appetite. The Dow Jones index fell 0.7%, the S&P 500 declined 0.33% and the Nasdaq lost 0.12%.
U.S. stock index futures began the new day mixed.
Bond selling dominates European markets
In European markets, concerns that geopolitical tensions linked to Iran would increase inflation worries and selling pressure in bond markets were influential. 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 created 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 index fell 0.79%, Germany's DAX 40 declined 1.17% and Italy's FTSE MIB 30 lost 0.01%. European stock index futures also began the day in negative territory.
Geopolitical pressure weighs on Asian markets
Asian stock markets traded mostly lower under the impact of rising oil prices, geopolitical risks and higher bond yields.
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. The result pointed to continued demand in the manufacturing sector, while cost pressures stemming from problems with domestic demand and geopolitical risks were assessed to be 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, South Korea's Kospi index fell 0.1%, Japan's Nikkei 225 declined 0.1% and Hong Kong's Hang Seng lost 1%. China's Shanghai Composite index traded flat.
Borsa Istanbul also declines
The BIST 100 index ended the previous trading day dominated by selling and fell 2.10% to 14,334.06 points. The August futures contract based on the BIST 30 index on Borsa Istanbul's Futures and Options Market also declined 1.2%.
Dollar/Turkish lira finished the previous day flat at 48.2560. The exchange rate traded at 48.2770 at the opening of the interbank market.
Turkey's manufacturing Purchasing Managers' Index data will be monitored domestically. Abroad, the U.S. JOLTS job openings, global manufacturing PMI data and eurozone inflation will be followed.
Technical assessments identified 14,200 and 14,100 points as support levels for the BIST 100 index, and 14,400 and 14,500 points as resistance levels.
Economic calendar
- 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: The United States' August manufacturing PMI
- 17:00: The United States' August ISM manufacturing PMI and July JOLTS job openings
