Yen hits six-month high as Asian markets split on Iran oil fears
Yen surges to 153.51, Brent holds above $97, and Asian shares trade mixed as Iran threats and economic data pull markets in different directions.
Asian equities struggled for a clear direction on Tuesday as a surging yen, elevated crude prices, and fresh geopolitical tensions offset encouraging economic data from Japan.
The Japanese currency strengthened as much as 0.6% to 153.51 against the dollar — its firmest level since February 18 — before settling. The move came as traders weighed the implications of accelerating domestic wage growth for Bank of Japan policy.
Japan's Nikkei 225 swung between gains and losses before closing 0.2% higher. Elsewhere, MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2%, supported by a 1.2% advance in South Korea's KOSPI. US futures pointed to a marginally softer open on Wall Street after Monday's Labor Day holiday.
Oil remained a key driver of sentiment. Brent crude edged up to $97.04 a barrel, extending gains into a third session, after Iran threatened to strike energy infrastructure across the Gulf — including US oil and gas interests — in response to any new attacks. Analysts noted that the weekend's tit-for-tat exchanges between Washington and Tehran were adding upward pressure on prices and weighing on risk appetite.
Bond markets also reflected the cautious mood, with the yield on the 10-year US Treasury rising slightly to 4.788%. Futures markets continued to price in roughly a 60% probability of a quarter-point rate hike at the Federal Reserve's September 16 meeting.
On the data front, the picture was mixed. Japan's economy grew faster than initially estimated in the April-June quarter, helped by stronger business spending, though the pace still fell short of analyst expectations. Separately, real wages in Japan rose 2.4% in July from a year earlier — the largest increase since May 2021 — prompting some economists to argue the case for faster Bank of Japan tightening is becoming more compelling.
Australia provided a counterpoint, with shares sliding 0.6% after a measure of consumer sentiment dropped sharply in September.
In commodities and digital assets, gold gained 0.5% to $4,428.23 an ounce, while bitcoin inched up 0.1% to $79,333.01 and ether climbed 0.2% to $2,498.94.