Clashes between Iran and the United States reopened a risky chapter in the Middle East this week as both sides exchanged strikes targeting sites in the United Arab Emirates and Jordan, stoking fresh supply fears that pushed oil prices higher.
Brent crude jumped about 3% to near USD 91 a barrel on the heightened tensions as traders priced in the potential for wider regional disruption to shipping and production. Safe-haven flows were more muted: gold held steady around USD 4,460 an ounce as markets balanced geopolitical risk against a firmer dollar.
The greenback rallied on Friday after Federal Reserve Chairman Kevin Warsh used his Jackson Hole address to reaffirm the Fed’s commitment to a 2% inflation target, underpinning expectations for a persistent period of restrictive U.S. policy. The yen slipped through the critical 160 per dollar level, prompting renewed speculation of possible currency intervention by Japanese authorities to stem the decline.
Macro data offered a bright spot in Asia: India’s economy grew 7.8% in the second quarter of 2026, outpacing market consensus of 7.3% and underscoring the country’s role as a key growth engine for the region.
On trade policy, U.S. Treasury Secretary Scott Bessent said he plans to use next month’s G20 meeting to press counterparts to reassess economic ties with China, warning that an annual trade surplus of roughly USD 1.2 trillion is “unsustainable.”
Market action was cautious. Equity bourses in Europe, mainland China and Japan traded around the flatline as investors weighed the twin headlines of geopolitical risk and hawkish U.S. policy; U.S. futures pointed to a roughly 0.3% decline at the open.
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