Asian markets
A man walks past a stocks display board that shows a drop in the Hang Seng Index of 3.08 percent, or 806.60 points, closing at 25,346.55, in Hong Kong on October 23, 2018.
Anthony WALLACE / AFP
Asian markets sink, gold extends gains as Iran warns on sanctions
(Agence France-Presse) - June 25, 2019 - 3:58pm

HONG KONG — Increasing concerns about a conflict between the United States and Iran hit equity markets Tuesday and sent gold prices to a fresh six-year high, jolting investor confidence days ahead of crucial trade talks between Donald Trump and Xi Jinping.

The latest round of sanctions against supreme leader Ayatollah Ali Khamenei and military top brass meant the "permanent closure of the path to diplomacy", the Islamic republic's foreign ministry said.

Trump unveiled the new restrictions Monday, days after the downing of a US "spy drone" that Tehran said had entered its airspace.

The tweet, from ministry spokesman Abbas Mousavi, provided a catalyst to sell for Asia stock traders, who had been sitting on their hands ahead of the Trump-Xi meeting at the end of the week.

In afternoon trade Hong Kong fell 1.4 percent, while Shanghai was 1.7 percent off and Tokyo dropped 0.6 percent off, with profit-taking after a recent rally adding to selling pressure.

Sydney was down 0.1 percent, Seoul and Singapore each retreated 0.3 percent and Taipei lost 0.8 percent. Still, Wellington, Manila, Bangkok and Jakarta were slightly higher.

London fell 0.5 at the open, while Frankfurt and Paris each lost 0.4 percent.

Safe haven investments climbed, with gold breaking $1,430 for the first time since September 2013, with a softer dollar adding support, while the yen -- a go-to unit in times of turmoil -- was up against the greenback.

Traders were also keeping tabs on developments in the China-US trade standoff as the leaders prepare for crunch talks on the sidelines of the G20 in Osaka.

World markets have rallied since Trump last week flagged positive phone talks with Xi and said they would discuss their trade spat.

On Tuesday, Chinese state media said top-level negotiators for both sides had held discussions ahead of the meeting, and "exchanged opinions on economic and trade issues". The call took place "at the request of the US side" and they agreed to maintain contact, the Xinhua news agency said.

"The G20 will not get going until midweek, but the anticipation of a meeting between the leaders of China and the US is keeping markets guessing," said OANDA senior market analyst Alfonso Esparza.

"The prolonged trade war between the two largest economies has downgraded global growth as more barriers to trade means higher prices. Optimism remains high, but more details need to emerge before the market can fully price in how far apart the two sides really are from a deal."

Despite the rising fears of conflict between the US and Iran crude prices extended the morning's losses, with David Madden, market analyst at CMC Markets UK, saying "traders began to fear that demand for oil will fall".

Iran and the US have said they do not want a war, with the US content with trying to cripple Iran economically.

Oil traders are also keenly awaiting a meeting of OPEC and other major producers this weekend, hoping for clarity on their output reduction programme, which has supported prices.

The greenback was down against most other currencies, weighed by expectations the Federal Reserve will cut interest rates as soon as July, while bitcoin held above $11,000 after breaking the marker for the first time in 16 months.

ASIAN MARKETS
As It Happens
LATEST UPDATE: July 18, 2019 - 4:45pm

Monitor updates on US foreign policies that affect the world.

July 18, 2019 - 4:45pm

The US House votes to block $8.1 billion in arms sales to Saudi Arabia and other allies, a rebuke of Donald Trump that will likely lead to a veto by the president.

Lawmakers, many of whom are outraged with the kingdom over Riyadh's role in the murder of Saudi journalist Jamal Khashoggi last year, approved three resolutions that would prevent the controversial sales announced under emergency measures earlier this year by Trump.

— AFP

July 2, 2019 - 7:59am

US President Donald Trump warns that Iran is "playing with fire" after Tehran said it exceeded a limit on enriched uranium reserves under a 2015 nuclear deal abandoned by Washington.

"They know what they're doing. They know what they're playing with and I think they're playing with fire," Trump tells journalists when asked if he had a message for Iran. 

— AFP

June 25, 2019 - 4:00pm

Iran's President Hassan Rouhani says new US sanctions against senior Iranian officials including top diplomat Mohammad Javad Zarif showed Washington is "lying" about offering to negotiate.

"At the same time as you call for negotiations you seek to sanction the foreign minister? It's obvious that you're lying," Rouhani says in a meeting with ministers broadcast live on TV.

His comments come after US National Security Advisor John Bolton said Washington had "held the door open to real negotiations" but that "in response, Iran's silence has been deafening."

June 25, 2019 - 2:05pm

US sanctions against Iranian leaders represent the "permanent closure" of the path to diplomacy with Washington, Iran's foreign ministry says.

"Imposing fruitless sanctions against Iran's supreme leader (Ayatollah Ali Khamenei) and the commander of Iran's diplomacy (Foreign Minister Mohammad Javad Zarif) is the permanent closure of the path to diplomacy with Trump's desperate government," ministry spokesman Abbas Mousavi says in a tweet.

June 25, 2019 - 8:19am

The UN Security Council calls for dialogue to address rising tensions between the United States and Iran and stresses that measures must be taken to end tensions in the Gulf.

In a unanimous press statement drafted by Kuwait, the council condemns recent attacks on oil tankers, calling them a threat to the world's energy supply and to international peace and security.

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