Main developments
Oil prices rose at the Asia open before falling back slightly in early trading as markets reacted to tit-for-tat threats by the US and Iran over the weekend.
Iran has linked the opening of the Strait of Hormuz to the lifting of sanctions, saying “freedom of trade” was essential to freedom of navigation.
Tehran threatened to hit US-linked financial institutions and “vital” infrastructure in the Middle East in response to further US attacks, warning it could also close the Strait of Hormuz to all traffic indefinitely.
Trump said late on Saturday the US would strike Iran’s power plants if the country did not open the strait within 48 hours.
Iran’s senior military commander said the country’s military strategy had shifted from defensive to offensive.
Israel’s military chief said the war was at its “halfway point” and suggested the conflict would continue at least until early April, while defence minister Israel Katz said the “intensity” of attacks on Iran would increase in the coming week.
Australia’s stocks, bonds and currency fall on higher energy costs
Australia’s stocks, sovereign debt and currency fell in early trading on Monday as higher energy costs and lower metals prices weighed on investor sentiment.
The country’s benchmark S&P/ASX 200 stock index slipped 1.8 per cent, with mining companies among the worst performers. BHP, the world’s largest mining company by market capitalisation, slipped more than 2.5 per cent.
Yields on 10-year Australian government bonds jumped 0.13 percentage points to 5.15 per cent and the Australian dollar weakened 0.2 per cent to $0.70. Bond yields move inversely to prices.
Gold prices have fallen more than 12 per cent since the war began as a stronger dollar and expectations of higher interest rates dent bullion demand. Copper prices have dropped more than 11 per cent.
Donald Trump and Keir Starmer discuss Gulf crisis
US President Donald Trump spoke to UK prime minister Sir Keir Starmer on Sunday evening.
“The leaders discussed the current situation in the Middle East, and in particular, the need to reopen the Strait of Hormuz to resume global shipping,” said a Downing Street spokesperson.
“They agreed that reopening the Strait of Hormuz was essential to ensure stability in the global energy market,” the spokesperson said, adding that they had agreed to speak again soon.
Trump has been critical of Starmer’s refusal to participate in the war against Iran, although the UK confirmed on Friday that it would allow the US to conduct strikes on Iranian military sites from UK bases. The president said London should have “acted a lot faster”.