Asian shares little changed as Iran war keeps oil prices up

Published Mon, Aug 17, 2026 · 10:49 AM

[SYDNEY] Asian shares drifted sideways on Monday (Aug 17) while investors kept a wary eye on oil prices, which notched sizeable gains last week as the lack of progress towards ending the Iran war kept inflation risks tilted to the upside.

Progress towards peace talks and oil tanker traffic through the strategic Strait of Hormuz remained halted.

Iran on Saturday called on the US to accept defeat, while US President Donald Trump urged Americans to accept higher petrol prices while the conflict continues.

At least 11 people were killed in Israeli strikes in southern Lebanon on Saturday, the Lebanese health ministry said, some of the deadliest in the weeks since the country agreed to a US-mediated peace framework with neighbouring Israel.

Brent crude was steady at US$88.50 a barrel after rising 6 per cent last week, while US crude slipped 0.3 per cent to US$82.12 a barrel, having gained 5.4 per cent last week.

“While there is still no resolution to the Iran/Hormuz impasse, our base case remains that oil prices will stay in a US$70 to US$100 range with Iran preventing it going lower and the US moving to try and calm things down whenever it gets above US$100,” Shane Oliver, chief economist at AMP, said in a note.

“The risk remains that there will be no sustainable peace deal, the flow of oil out of the Middle East remains down 10 to 15 per cent on normal levels and that we will have to face higher oil prices as reserves run down.”

On Monday, MSCI’s broadest index of Asia-Pacific shares outside Japan was flat, while Japan’s Nikkei edged 0.4 per cent higher. Australia’s resources-heavy shares slipped 0.3 per cent.

South Korea’s stock markets are closed on Monday for a public holiday. Trump has instructed the Pentagon to substantially reduce joint military exercises with the country.

All eyes are on the release of China’s activity data for July on Monday after its exports boomed on robust global artificial intelligence demand to support the world’s second largest economy.

Forecasts are centered on a slowdown in industrial output growth to 4.8 per cent, from 5.3 per cent previously, while retail sales likely rose 1.5 per cent.

For Europe, Euro Stoxx 50 futures rose 0.2 per cent. S&P 500 futures gained 0.1 per cent, having hit a record last week, while Nasdaq futures firmed 0.2 per cent.

The bullish run in stocks has been driven by diminishing risk that the US Federal Reserve will not raise interest rates next month, which is now seen as a 69 per cent probability event after a slew of soft data.

US retail sales posted the first decline in nine months in July and consumer sentiment soured by more than expected, adding to soft inflation readings that took out the impetus for the Fed to hike immediately.

The main data point this week is the August S&P Purchasing Managers’ Indices (PMIs) to see if the mid-year acceleration in US business activity would be sustained.

Earnings are lighter this week but include Home Depot, Target, Walmart as investors scrutinise the strength of US consumers.

In bond markets, US Treasury yields slipped on Monday after finishing last week mixed.

The two-year US Treasury yield fell 2 basis points to 4.156 per cent, having fallen 3 basis points last week to touch a seven-week low of 4.0977 per cent.

Ten-year yields slipped 1 basis point to 4.684 per cent, after rising 4 basis points last week.

The soft run of data has weighed on the US dollar, with the euro up 0.1 per cent at US$1.1578, just off a two-month peak of US$1.1585. The US dollar slipped 0.1 per cent on the yen to 159.15 .

In commodity markets, gold held at US$4,381 an ounce, having climbed 0.8 per cent last week. REUTERS