Oil prices extend decline towards $80/bbl amid Iran-related optimism

Asia market update: Hot inflation data seen in JP and AU, keeping the RBA and BOJ on guard; Uncertainty remains ahead of Nvidia earnings and Jackson Hole; Oil prices extend decline towards $80/bbl amid Iran-related optimism; Himino to speak and the BOK to set rates on Thurs.; US PCE data due.

General trend and developments

- Risk appetite has generally improved during the session, although rate hike expectations weighed on Australia’s ASX 200. Even still, sentiment has been, somewhat cautious ahead of Nvidia earnings and Jackson Hole.

- Oil FUTs and bond yields dropped on Iran-related headlines: Reportedly, the US offered to halt the ‘siege’ and lift sanctions on Iran in exchange for the reopening of the Strait of Hormuz and ending of proxy attacks [unconfirmed report from Al Arabiya from the European session]. At the same time, Iran and Oman Foreign Mins later said they discussed a phased framework to provide a practical basis for resuming safe navigation through the Strait of Hormuz. Iran and Oman are also seeking to reach an agreement on a permanent Strait of Hormuz route within 60 days, according to Iranian media.

- Iranian Foreign Min Araghchi noted regional solutions were stressed in talks with Pakistan and Oman counterparts; Proposed framework for new corridor includes joint mine-clearing and future management of the Strait of Hormuz.

- Hence, US Sec of State Rubio reportedly informed foreign counterparts that 'for the time being' the US is not expected to initiate new strikes against Iran; US strategy shall shift from strikes to sanctions [Axios].

- Along the same lines, the US may return diplomats to the Mideast as soon as this week, says the NYT.

- The Pakistan-brokered 60-day deadline under the June Islamabad memorandum expired on August 17th, 2026, without a final U.S.-Iran settlement, though mediation contacts involving Pakistan, Qatar, Oman and others have continued, including efforts earlier today by Pakistan and Oman to convey Iran’s conditions and positions to the U.S. on returning to the MoU and arrangements to resuming safe navigation through the Strait of Hormuz.

- Recall, the US has repeatedly sought to apply ‘maximum pressure’ on the Iranian regime. On Monday, U.S. Treasury Secretary Scott Bessent launched “Operation Economic Outcast,” framed as an “economic D-Day,” expanding secondary sanction of five key Iranian sectors, whilst warning that any entity facilitating money laundering or economic engagement with Iran would be cut off from the U.S. dollar system.

- Japan and Australia inflation remains too high: Oil-sensitive components helped drive Japan’s PPI Services data to a multi-year high in Jul. Meanwhile, housing costs continued to exert upward pressure on Australian prices. Now, the Sept RBA and BOJ meetings are both live, perhaps. A large minority, also, expects the US Fed to hike rates in September. Markets will seek additional guidance from BOJ Dep Gov Himino’s comments on Thurs. and Jackson Hole. While BOJ Gov Ueda will not attend the Fed symposium this year, board member Tamura (hawk, dissenter) will represent the central bank at the conference. BOJ preparing a ‘hawkish’ message for Jackson Hole?

- Overall, as the Jackson Hole Economic Symposium approaches Thursday August 27th, 2026 —with the guest list released later today and official proceedings set to begin the day after— traders are closely watching for insights from Chair of the Federal Reserve of the United States Kevin Warsh. During yesterday’s US market session, August consumer confidence fell to 89.4 (vs. 90.2 expected), while the June FHFA House Price Index recorded flat m/m (vs. +0.2% expected) and rose +0.4% q/q (vs. +0.6% prior). Meanwhile, Boston Fed President Susan Collins (non-voter) stated inflation remains too high and that it would be appropriate to raise rates if there is no evidence of sustained disinflation, expecting a gradual disinflationary process later this year. Collins also viewed economic growth as near-trend, as the labor market remains balanced and close to full employment. All in all, U.S. equities edged higher in a quiet session, led by large-cap tech, with the S&P 500 up +0.3% to 7,677, the Dow gaining +0.3%, and the Nasdaq climbing +0.7% to 26,151, as the market positions itself ahead of Nvidia earning tonight.

- On Wednesday, August 26th, President Lee Jae-myung is scheduled to meet with Samsung Electronics Chairman Lee Jae-yong, SK Group Chairman Chey Tae-won and Hyundai Motor Group Chairman Chung Eui-sun. This week has already produced three key notable wage developments in South Korea. Today, Kia agreed to a tentative wage settlement: a KRW 100,000 (=$72.25) monthly base-pay increase, performance bonuses >400% of monthly salary, and an extra KRW 12.7 million (=$9,182) payment per worker. Earlier this week, SK Hynix union members narrowly rejected a tentative 2026 wage and collective-bargaining deal (50.08% against, with a 93.81 % turnout) forcing renegotiation, whilst Hyundai Motor reached a tentative agreement the same day for a KRW 100,000 monthly base-pay increase. (Reminder: Samsung Electronics, by contrast, settled its wage agreement on May 26th, 2026, with 74 % of its unionized workers approving an agreement that included an average bonus of ~$340,000 per chip employee.).

- Germany’s economy also showed modest improvement in the second quarter, with final GDP rising 0.3% quarter-on-quarter and 1.0% year-on-year (vs. 0.9% preliminary), while the August Ifo business climate index climbed +1.6pts more than expected to 88.8. Despite these positive indicators, broader market caution was evident in a recent €3.8 billion Schatz 2-year bond auction, which cleared with a higher average yield of 2.85% (vs. 2.78% prior). Against this backdrop of still-subdued growth and soft investment, Chancellor Friedrich Merz firmly underscored that the cabinet will urgently discuss measures to protect its domestic industry, as officials looks to restore competitiveness for German manufacturers facing high costs, weak domestic demand and intensifying Chinese competition.

- US equity FUTs -0.2% to -0.1% during Asia trading.

Looking ahead (Asian-weighted focus, using Asian time-zone)

-.Mon Aug 24th: TW July Unemployment Rate, (Mon night, MX Q2 GDP)

-.Tue Aug 25th: KR Aug Consumer Confidence, SG Q2 Prelim GDP, AU RBA Meeting Minutes, JP BoJ Core CPI, TW July Industrial Production, HK Jul Trade Balance, (Tue night, US Jul New Home Sales & Building Permits, US Aug CB Consumer Confidence)

-.Wed Aug 26th: AU Q2 Construction Work Done, SG July Industrial Production, TH BoT Interest Rate Decision, (Wed night, US July Core PCE, US Q2 GDP (2nd revision) & Prelim Personal Spending/Durable Goods Orders, RU July Industrial Production)

-.Thu Aug 27th: KR BoK Interest Rate Decision, CN July Industrial Profit YTD, PH BSP Interest Rate Decision, (Thu night, ECB Monetary Policy Accounts, US Jackson Hole Symposium Begins, MX July Trade Balance)

-.Fri Aug 28th: JP Aug Tokyo CPI & Core CPI, JP July Unemployment Rate, PH July Trade Balance, TH July Industrial Production, EU Aug Consumer Confidence, (Fri night, CA Q2 GDP, US Jackson Hole Symposium Fed Governor Warsh Speaks)

Holidays in Asia this week

-.Tue Aug 25th: Indonesia, Malaysia

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 opens +0.3% at 9,195.

-(AU) Australia July CPI M/M: 1.0% V 0.9%E; Y/Y: 3.5% V 3.3%E.

-(AU) Australia Q2 Construction Work Done: -2.1% v 0.4%e.

-(AU) Australia July Westpac Leading Index M/M: 0.0% v 0.1% prior.

-(AU) Deutsche Bank now sees RBA hiking rates to 4.6% in September meeting [follows the hotter Jul CPI data].

-(AU) WOW.AU Reports FY26 (A$) Net 1.60B v 1.52Be (v 1.39B y/y), Adj EBIT 3.11B v 3.05Be (v 2.75B y/y), Rev 71.54B v 71.63Be (v 69.1B y/y).

China/Hong Kong

-(CN) Shanghai Composite opens -0.2% at 3,881; (HK) Hang Seng opens +0.5% at 25,635.

-(CN) China and US agree to promote cooperation in AI and trade in 'Track 1.5' dialogue in Beijing - Chinese press [EU market close].

-(CN) China's Military: China's naval and air forces conducted routine patrol in South China Sea between August 21st-25th.

-(CN) China Finance Ministry sells 3-month and 6-month bills.

-(CN) China water sector secures first generative AI model approval; cites the Ministry of Water Resources - China Daily.

-(CN) TSLA Tesla China denies full withdrawal of Shanghai data center team - National Business Daily.

-(CN) HUAWEI.CN Announces multi-year signage of Wi-Fi global patent licensing agreement with HP; No financial terms disclosed - SCMP.

-(CN) China weight-loss drugmaker MindRank says AI cuts development time by 50% - US financial press.

-(CN) Beijing DeepZero Technology [2723.HK] : announces that the Company has entered into a memorandum of understanding in relation to strategic cooperation (the “MOU”) with Deloitte Consulting (Shanghai) Co., Ltd. (“Deloitte).

-(CN) China PBOC sets the yuan mid-point at 6.7829 v 6.7852 prior.

-(CN) China PBOC Open Market Operation (OMO): Sells CNY240B in 7-day Reverse Repos; Net injects CNY240B v injects CNY386B prior.

-(HK) BABA Co-Founder Jack Ma purchases HK$600M in Alibaba shares to show support for its AI ambitions - SCMP.

-(HK) BABA Has 1.25M shares crossed at HK$112.20/share in Hong Kong.

Japan

-(JP) Nikkei 225 opens -0.4% at 65,593.

-(JP) Japan July PPI Services Y/Y: 3.6% v 3.2%e [multi-year high].

-(JP) Bank of Japan (BoJ): BoJ Governor Ueda will not attend this week's Jackson Hole Meeting; BoJ Board Member Tamura (hawk; dissenter) will attend on Ueda's behalf, no media opportunity.

-(JP) Japan reportedly considers condo sales tax change to curb speculation - Nikkei [US market close].

-(JP) Japan Economy Minister Kiuchi: Expect CPI to gradually rise due to conditions in the Middle East.

-(JP) Japan oil refinery operating rate 80.4% in week to August 22nd v 88.6% in week to August 1st.

-(JP) Japan plans ¥100B (≈$630M) support for undersea cable ships - Nikkei.

-(JP) Japan sells ¥650B vs ¥650B indicated in Liquidity Enhancement Auction.

-(JP) Japan's benchmark 10-year JGB FUTs rise +0.28pts in early trade; lower oil prices in focus, along with the US Fed's Jackson Hole.

Korea

-(KR) Kospi opens -0.2% at 6,727.

-(KR) South Korea July Retail Sales Y/Y: 6.4% v 9.5% prior.

-(KR) South Korea President Lee to hold Wed meeting with business leaders - Yonhap.

-(KR) South Korea plans to cut industrial power rates by up to 10% - Yonhap.

-(KR) South Korea Aug Business Manufacturing Survey: 103.8 v 103.2 prior.

-(KR) South Korea challenges China for Arctic sea route to Europe - FT.

-(KR) 000270.KR [Confirms] Reached tentative wage agreement with union on Tuesday, August 25th, 2026.

Other Asia

-(SG) Singapore July Industrial Production M/M: 2.3% v 4.8%e; Y/Y: 6.8% v 6.8%e.

-(SG) Singapore announces child benefits plan for up to $70,000 from birth to age 17 - update from Aug 23rd.

-(ID) Indonesia Central Bank Governor Candidate Destry: The direction of bi-policy represents the continuation of BI's effort to maintain stability, support growth.

-(TW) Taiwan Exchange to tighten rules on equity settlement - local press.

-(TW) 2317.TW Issues mandate for Euroyen bond issuance - US financial press.

North America

-(US) Aug consumer confidence: 89.4 V 90.2E [US market close].

-(US) Fed's Collins (non-voter): Inflation is still too high; Will be appropriate to raise rates soon if there is no evidence of sustained disinflation; Holding rates require more evidence of inflation receding; Expect to see gradual disinflation process later this year [US market close].

-(US) July new home sales: 607K V 620KE; Months supply (seasonally adjusted): 9.6 v 9.3 prior m/m [US market close].

-(US) Jun FHFA house price index M/M: 0.0% V 0.2%E; Q/Q: 0.4% V 0.6% prior [US market close].

-(US) Treasury $69b 2-year note auction draws 4.204% V 4.315% prior; bid-to-cover: 2.60X V 2.66X prior and 2.58 over the last 12 auctions [US market close].

-(US) Pres. Trump: Reiterates Canada has been “Ripping Off” the U.S.A. for decades. They have been charging our Farmers 400% Tariffs, and more [US market close].

-(US) ADP Preliminary Employment Change for 4-weeks ending August 8th: +11.8K v +9.5K prior (hiring increased for the second week) [US market close].

-(US) Aug Richmond Fed Manufacturing index: 4 V 7E; Backlog of orders: -7 v 4 prior; Wages: 26 v 28 prior [US market close].

-(US) Aug Philadelphia Fed Non-Manufacturing Activity: -10.6 v 3.6e; New Orders: -10.1 v 12.5 prior; Prices Paid: 29.2 v 28.2 prior [US market close].

-(US) US Administration Official: [Confirms] Trump Administration has sent to congress agreement on civil nuclear energy with Saudi Arabia.

-(US) Fed’s Barkin (non-voter): There will eventually be a reckoning of US debt.

-(US) Weekly API Crude Oil Inventories: +4.2M v -0.3M prior.

-(US) Sec State Rubio reportedly informed foreign counterparts that 'for the time being' the US is not expected to initiate new strikes against Iran; US strategy shall shift from strikes to sanctions - Axios.

-(US) Secretary of State Rubio to meet with Mexico's Finance Minister Robert Velasco at 9:30am ET, Wednesday 26th August, 2026.

-(US) California Senate said to oppose limits on insurance fire claims - press (update).

-(US) CDC and FDA are investigating at least six other clusters of cyclosporiasis; Sources are not yet confirmed.

-(US) ANTHROPIC.IPO Reportedly Execs expected to inform investors that Anthropic sees more than ~$30T in total addressable market, or potential revenue - WSJ [US market close].

-(CA) Canada Intl Trade Min Leblanc: [Confirms] Govt intends to announce retaliatory tariffs on U.S today [US market close].

-(CA) Canada intends to place 15-50% tariffs on ~$20B of US products; Retaliatory tariffs will include steel, dairy, and appliances; Effective Sept 8th, counter tariffs will be applied to 700 US products - WSJ [US market close].

-(CA) US weighs more trade measures against Canada after retaliation; The Trump administration is discussing additional trade penalties [including non-tariff measures] - Press [update].

-(BR) Brazil Aug FGV Consumer Confidence: 84.7 v 88.3 prior [US market close].

-(BR) Brazil Treasury: Plans to announce changes on annual financing plan on Wednesday [26th August, 2026] - Statement.

-(BR) Brazil July Tax Collections (BRL): 289.4B v 264.4B prior.

-(CO) Colombia Court upholds pension law, orders partial review.

Europe

-(EU) Reportedly ECB policymakers are prepared to raise rates in September to stem side effects of Iran War - press [EU market close].

-(DE) Germany Q2 final GDP Q/Q: 0.3% V 0.2% prelim; Y/Y: 1.0% V 0.9% prelim [EU market close].

-(DE) German Chancellor Merz: Cabinet to discuss how domestic industry can be protected [amid rising Chinese competition]; Govt to comment shortly on attribution for attempted attack on Leipzig Airport [EU market close].

-(DE) Germany Aug ifo business climate: 88.8 V 87.2E [EU market close].

-(HU) Hungary central bank (MNB) cuts base rate by 25bps to 5.50%; as expected [EU market close].

-(RU) Russia, Ukraine to discuss a prisoner of war swap - Tass.

Middle East

-(IR) Reportedly US offered to halt the siege and lift sanctions on Iran in exchange for opening Hormuz and stopping proxy attacks - Al Arabiya [EU market close].

-(IR) Iran Semi-Official Tasnim: Pakistan to convey Iran's conditions and positions to U.S; Conditions include return to MOU, including about Strait of Hormuz [EU market close].

-(IR) Iran and Oman Foreign Mins say they discussed a phased framework to provide a practical basis for resuming safe navigation through the Strait of Hormuz [EU market close].

-(IR) Qatar Foreign Ministry spokesperson: US sanctions on Iran are unilateral [EU market close].

-(IR) Commodity vessel transit through the Strait of Hormuz on Tuesday at 5 v 1 prior, 'well-below' 10-day average - Data [citing shipping data].

-(SA) Reportedly Pres Trump has sent Saudi Arabia nuclear agreement to Congress - WSJ.

Levels as of 01:20 ET

Nikkei 225 +0.6%; ASX 200 -0.3%; Hang Seng +0.6%; Shanghai Composite +0.6%; Kospi +0.9%.

Equity S&P500 Futures -0.1%; Nasdaq100 -0.2%; DAX -0.1%; FTSE100 +0.2%.

EUR 1.1678-1.1660; JPY 159.26-158.88; AUD 0.7187-0.7160; NZD 0.5982-0.5953.

Gold -0.3% at $4,644/oz; BTC -2.2% at $78,903; WTI Crude Oil -2.0% at $80.69/bbl; Copper +0.7% at $6.7563/lbs.