Oil Slumps 5% on Trump's Iran Claims; Yen Jumps on Joint Intervention

Oil slid nearly 5% on Monday, with prices down as much as 6% at the open, after President Donald Trump said he had called off planned strikes on Iran's infrastructure and suggested an agreement to reopen the Strait of Hormuz may be close. The decline reflected investor expectations that easing tensions between Washington and Tehran could reduce the risk of ongoing disruption to global crude supplies through the strait.

Speaking to reporters aboard Air Force One shortly before US markets opened on Globex Sunday evening, Trump claimed a Hormuz deal had been reached and said denuclearisation talks with Iran would begin the following afternoon. That claim remains unconfirmed and follows a pattern of disputed statements from Trump on Iran. His earlier assertion that Tehran had requested a pause in strikes was flatly denied by Iran's Mehr news agency, which called it "a new lie."

The gap between Trump's diplomatic framing and conditions on the ground was underscored by reports of Iran firing a cruise missile at an oil tanker transiting the protected southern Hormuz route, alongside separate UK Navy reports of vessels under attack in the strait and surrounding waters. US equity markets showed a far more muted response than oil, with ES and NQ futures opening only around 0.5% higher, suggesting equities are treating the de-escalation claims with greater scepticism than the crude market.

On currencies, US Treasury Secretary Scott Bessent and Japan's Ministry of Finance officially confirmed Friday's coordinated yen-buying intervention, removing the ambiguity that had surrounded the suspected action and pledging readiness for further joint moves if needed. "We will not hesitate to participate in further joint intervention," Bessent said. Japan's top currency official, Atsushi Mimura, reinforced the message, framing the intervention as the culmination of the US-Japan currency alliance and raising the prospect of further coordination with the Bank of Japan to support the currency.

The yen extended its rally through the session, with USD/JPY posting a sharp plunge below 156. Widely circulated market chatter, though unconfirmed, pointed to a wall of importer dollar-buying bids resting around the 155 level, a level that may act as near-term support should the yen's advance continue.

The stronger yen weighed heavily on Japan's Nikkei, which fell sharply as export-oriented stocks were sold on concerns over deteriorating overseas profitability. South Korea's KOSPI also dropped as Samsung and SK Hynix extended losses on lingering doubts about AI-related chip demand, despite both companies reporting strong earnings last week.

In data, China's manufacturing sector expanded at its slowest pace in four months in July. The RatingDog China General Manufacturing PMI, compiled by S&P Global, fell to 50.9 from June's 51.7, missing the forecast of 51.5. Output and new order growth both slowed, though export orders returned to growth after a prior contraction, leaving the headline reading still above the 50-mark that separates expansion from contraction.

The US dollar's broader weakness against the yen also fed into forex market analysis as traders recalibrated positions after the confirmation of joint intervention. The coordinated action, the first of its kind in months, signals a lower tolerance in both Washington and Tokyo for disorderly yen depreciation.

For traders tracking the crude complex, the next catalyst is the afternoon's scheduled start of US-Iran denuclearisation talks, assuming Trump's timeline holds. The gap between diplomatic claims and military reality in the Strait of Hormuz leaves the oil market exposed to whipsaws in either direction.